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The Insurance Buying Guide: How an LTC Policy Pays

The majority of LTC policies are indemnity contracts. This means that a daily benefit, such as $100 per day, would be paid for each day of care.

However, some LTC policies are based on a reimbursement (or expense-incurred) format. As with many health insurance plans, the insurance company will reimburse you for a percentage -- such as 80 percent -- of actual expenses incurred due to a stay in a nursing home.

Some policies offer a daily benefit for nursing home coverage, but a reimbursement benefit for home health coverage. Still others offer a maximum lifetime benefit amount, from which incurred expenses are deducted.

You'll need to determine how a particular policy will pay when you are comparison shopping. You also may want to look into how much nursing home care will cost in your area, so you can make a wise choice between an indemnity or a reimbursement-style policy.

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