Long-Term Care Insurance: What It Really Covers

Photo: Joanna Orpia

Long-term care insurance is a very popular way to prepare for expenses in the event you or your loved ones are unable to take care of yourselves for an extended period of time.

Unlike regular health insurance, long-term care insurance is designed to reimburse the policy holder for a set amount per day for a maximum time period determined by the policy. The policy will help pay for a variety of services in several different settings.

Even if you feel you are a completely healthy person, bear in mind that the average person requires three years of long-term care during their lifetime. Many people believe long-term care insurance is only for those who end up in nursing homes, but the reality is there is a lot of degrees of care the insurance will cover.

So, the benefits of long-term care insurance and how the benefits are paid might mean more to you than you think.

When long-term benefits begin
In order to receive long-term care benefits, two criteria must be met. You have to have a "trigger" and a certain amount of time has to pass after the trigger is identified.

A Benefit Trigger is the criteria the insurance company uses to determine if you need long-term care. This is usually definied by needing help with a certain number of Activities of Daily Living (ADLs).

Once the trigger occurs, a pre-determined amount of time must pass before benefits will begin, known as the "elimination period". In other words, this is the period of time that makes the need for care a "long-term" need.

For those who may be unfamiliar with long-term care insurance and what it covers, here is an overview of what the daily benefit amount can be applied toward. Maybe getting coverage now could be the right move for you.