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Features of a Good Long Term Care Insurance Policy
Features of a Good Long Term Care Insurance Policy
The current cost of care warns people how expensive long term care is, and the price could even triple in few years. If you will just imagine, a person has to dawdle around $75,000 (as of 2010) for long term care, which can deplete his or her financial resources. For that matter, long term care insurance is given the highest importance.
Nowadays, long term care insurance is considered as the most crucial and high-end product in the market today for seniors and the disabled, and insurance companies are raving about its benefits. You cannot tell long term care insurance is the best product unless you have maximized its benefits and choose a good insurer. Consider these factors when choosing an LTCi policy:
Credibility
You surely don't want to get mediocre services from a bad or not-so-stable company. The name of the company and its brand is not the primary factor that differentiates the best company from the bad ones. The financial ratings and background must be scrutinized to ensure the company is not a fly-by-night operator. You may also check the ratings through A.M Best.
Well-explained Policy
Some companies made a mistake in creating complex policy wording that confuses consumers on what exact services are covered by their policies. Consumers find it difficult to understand certain insurance jargons, so it is best to find a policy that explains everything from cover to cover. The policy must enumerate or define everything that is covered in the policy and all the corresponding limitations in a language that is comprehensible for an ordinary consumer.
If there are definitions you can quite understand don't be embarrassed to ask questions from the insurance agent or an LTCi expert to lessen your speculations and help you decide better. Avoid any vague words (accidentally or intentionally) used by companies to attract consumers from buying policy. One indefinite term found in most LTC contract is the word "substantial." It creates various interpretations, though. Anyone who catches up this word might think of its meaning as a "personal" or "hands-on" assistance provided by another individual. Also, be careful with the word "assistance."
Only a reputable company will explain what these vague words mean because they don't want to mislead their consumers. The legal terms must be specific and precise to prevent any unwanted interpretations of the person in charge of claims in the future.
Tax Deduction
Tax-qualified policies are better than non-tax qualified policies for number of reasons:
Tax-qualified policies are treated as medical expense and deducted from your tax based on age caps
The benefits under tax-qualified policies are not taxable
Non-reimbursed LTC services are also treated as medical expenses and can be recognized as itemized deduction only if it is higher than the 7.5 percent of the policyholder's adjusted gross annual income
All tax-qualified LTCi policies must abide and meet the federal guidelines. These are the following rules for long term care insurance tax deduction:
Your condition require at least 90 days of care
Have cognitive impairment that requires amount of help or assistance
Incapable of performing at least two activities of daily living (ADLs)
Get a licensed health care professional to provide a "plan of care"
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