Choosing the amount of daily or monthly benefit is the first step in selecting a long term care insurance policy. Some companies offer both options, while others only offer one or the other. Generally, the options will be expressed something like this:
Daily benefit: $50-500 per day
Monthly benefit: $1,200 – $12,000 per month
So which is better? The monthly benefit. Since long term care insurance generally reimburses for covered expenses up to the policy limits, you want to capture the maximum amount of dollars as you can. Let’s use an example:
Jim has a long term care policy and uses his home healthcare benefit to have a licensed aide come in twice a week for assistance. Each visit costs $300. If Jim has a daily benefit of $150, Jim would recoup 8 days per month in costs at $150 each for a total of $1,200. With a monthly benefit of $4500, Jim would recoup the full $2,400 in costs. That’s because the total cost of $2,400 is lower than his monthly benefit amount of $4500, but higher than his daily benefit amount of $150 per day. Even though the total maximum benefits are the same, the monthly benefit pays him back more money.
For companies that offer both options, they will charge a slightly higher premium for a monthly benefit. Your daily or monthly benefit is usually combined with an inflation protection benefit, such as 3% or 5% compounded to keep up with the increasing cost of care as you get older.
It is important to structure your long term care policy in a manner which provides the necessary benefits, but also fits within your budget.
To get a quote and compare long term care insurance policies from the top LTC companies in the industry, please complete the short form below, give us a call at 1-800-571-2980 from 9 AM to 9 PM eastern time, or send us an e-mail at Info@terminsurancebrokers.com 24 hours a day. We can help design a long term care policy to suit your personal needs and budget. Due to the complex nature of structuring long term care plans, there is currently no way for us to offer instant online quoting.