Long-term Care Insurance Flashcards
Long-term care
All forms of continuing personal nursing care and associated domestic services for those unable to look after themselves without some degree of support. Usually elderly people or those disabled from birth or due to illness/accident.
Aims of LTC
1) Restore independence
2) Reduce rate of deterioration
3) Maintain well-being
Aims of LTC insurance
1) Meet psychological need to know there will be sufficient funds to pay for care should it be required
Deferred period (in LTC context)
The length of time the policyholder must demonstrate incapacity for before the condition is considered permanent and the claim is triggered e.g. 3, 6, 12 months
Equity release
The insured party effectively sells their property partially or fully to an insurer in exchange for a LTCI product and the right to remain rent-free in their home until they die
Pre-funded LTCI plan
Paid for by either a single premium at outset or a series of regular premiums paid during the period where no care is required.
Usually written on a whole life basis so premiums payable even after retirement.
Possible need for future care.
Care start date and duration uncertain
Immediate-needs LTCI plan
Where a single premium is paid and care is funded immediately.
Known need for care.
Care duration uncertain.
Triggers for LTC
1) Insured cannot perform a specified number of ADLs
2) Mental impairment
Structure of LTCI policies
1) Stand-alone products
2) Rider benefit added to life or CI policy
Pre-funded unit-linked investment plan
An investment plan that allows some or all of the investment to remain part of the insured’s estate on death. The unit fund is protected to some degree (this impacts the deferred period for the insurer)
Death benefits available on a pre-funded policy
Possible if in healthy state at death (reducing over a fixed time period since purchase)
Discontinuance benefits available on a pre-funded policy
No benefits on withdrawal but the policy may become paid up:
1) Main benefit amount reduced
2) Death benefits from healthy state reduced
3) Deferred period increased
4) Benefit escalation reduced
5) Benefit payment period reduced
