Taking Care of Mom and Dad: Benefit Schedules

LTC policies, even though they are not standardized, contain similar benefits and provisions. Occasionally, some of these policies will offer newer or unique benefits or features. The following is a composite of the common benefit features and provisions found in most individual contracts.

Most LTC policies provide a daily benefit during confinement. Benefit amounts range from $50 per day up to $200 or $250 per day. Some insurers may pay all of the actual charges incurred.

Assume your mother has a LTC policy with a 30-day elimination period, a daily benefit of $150 per day and a two-year benefit period. And, let's say that your mother is confined to a nursing home for a total of seven months. Her benefit calculation would be:

1) First 30 days: No benefit paid (elimination period) 2) Next six months: $150 per day (assumes 30-day month) $150 x 6 x 30 = $27,000 If your mother's actual charges were more than $150 per day, she'd be responsible for the excess amount.

Most individual LTC policies are guaranteed renewable. That is, the insurance company guarantees to renew the policy but reserves the right to increase the premium. A small number of individual LTC policies are optionally renewable. The insurer has the option to renew, cancel or increase the premium by class. Eventually, there may be noncancellable LTC contracts where renewability and premium are guaranteed for the life of the policy.

If the premiums are increased, they will be changed on the policy anniversary and the increased premium will apply to an entire class of policyholders, not a single individual. For example, all policyholders in a given state will have their premiums increased on their respective policy anniversaries.