Long-term care insurance

Question 1

Claim escalation rates

Answer 1

Escalation rates for claims fall into two specific categories:

• benefits increase in line with Consumer Price Index
• the policyholder is offered a choice of set percentage increases

Question 2

Definition of incapacity

Answer 2

The definition for incapacity in LTCI usually includes cognitive impairment and inability to perform one or more ADLs.

Question 3

Immediate needs annuity

Answer 3

This is an immediate annuity purchased by an impaired life requiring long-term care. It provides regular payments guaranteed throughout the annuitant’s lifetime, and thus provides provides protection against the uncertain survival duration.

Question 4

Long-term care insurance

Answer 4

This type of insurance can be used to help provide financial security against the risk of needing either home or nursing-home care as an elderly person, ie post-retirement. The contract could pay for all the costs of care throughout the remainder of life or could provide a cash lump sum or annuity to contribute towards the costs of care.

Question 5

Residential facilities

Answer 5

Long-term care facilities that provide supervision and assistance in activities of daily living with medical and nursing services when required.