A:

An insurance benefit is the amount of money paid to or on behalf of the policyholder. Depending on what kind of insurance policy the policyholder signs up for, the payments are made directly to the insured or on behalf of the insured to a service provider – as long as the service is covered under the policy. Insurance benefits can be made daily, weekly or monthly.

Daily benefit amount (DBA) refers to the maximum amount most long-term care (LTC) policies are willing to pay for each day of care. Insurance companies usually pay the lesser of the daily cost of care or the daily benefit amount. For example, if the DBA for your policy is $150 a day and the actual cost of care for a day is $250, the company will pay $150. Therefore, if the cost of care is greater than the daily benefit amount, then the policyholder has to pay the difference out of pocket. The higher the daily benefit amount, the more expensive the policy will be. In other words, choosing a policy that has a daily benefit amount is more likely to result in higher premiums.

On the other hand, with a monthly benefit, the insurance company pays you that amount. For example, if you sign you for a monthly benefit of $2000, much like a daily benefit, the insurance company will provide you with a maximum of $2000 monthly. However, a monthly benefit is less likely to increase your premium than a daily benefit package. Therefore, it is more convenient and potentially cheaper for a policyholder to receive a monthly benefit rather than a daily benefit.

To learn more, see A New Approach To Long-Term Care Insurance.

This question was answered by Chizoba Morah.

RELATED FAQS
  1. What alternatives to Long Term Care Insurance are there besides self-insuring?

    Both me and my spouse have chronic health issues (hepatitis C and lupus) that would cause LTC insurance to b... Read Answer >>
  2. Can your insurance company cancel your policy without notice?

    Learn about your rights as an insured when it comes to your insurance policy being canceled, including how to access your ... Read Answer >>
  3. How can I invest in a mutually owned insurance company?

    Read about the difference between mutual and stock insurance companies, including how to become a de facto investor of a ... Read Answer >>
  4. What is the difference between the death benefit and cash value of an insurance policy?

    Understand the difference between the various components of a life insurance policy including the death benefit and a policy's ... Read Answer >>
  5. What is the average return on total revenue for the insurance sector?

    Learn about the three main segments of the insurance industry, and find out what the average return on revenues is for the ... Read Answer >>
  6. Can my insurance company refuse me coverage?

    Insurance isn't always as straightforward as other products. Insurers can deny coverage in many different instances:Non-Renewal ... Read Answer >>
Related Articles
  1. Personal Finance

    How Linked Benefit Insurance Policies Work

    Linked benefit policies can be a viable alternative to traditional long-term care insurance. Here's how they work.
  2. Retirement

    The Cost of Long-Term Care Insurance

    Long-term care insurance has a reputation for being pricey – and it can be. But there’s good news: Prices declined by about 10% from 2015 to 2016 for a couple in their 60s purchasing ...
  3. Personal Finance

    Dividend-Paying Whole Life Insurance: What to Know

    Many whole life insurance policies pay dividends. Here are what policyholders need to consider.
  4. Personal Finance

    Understanding Insurance Claims

    An insurance claim is a formal request made to an insurance company that asks for a payment based on the terms of the policy.
  5. Markets

    Mutual Vs. Publically Traded Insurance Companies

    Should you buy your insurance policy from a mutual or publically traded insurance company?
  6. Personal Finance

    Taking The Surprise Out Of Long-Term Care

    Don't be caught unprepared - find out what to look for in LTC insurance policies.
  7. Personal Finance

    How to Protect Your Income No Matter What

    What does it mean to insure your income? Here are a variety of ways to do it and some insights into when it might make sense to invest in income insurance.
  8. Personal Finance

    Is Loan Protection Insurance Right For You?

    This coverage can keep you from defaulting on your loans when you're in financial trouble.
  9. Personal Finance

    Understanding Taxes on Life Insurance Premiums

    Learn about the tax implications of life insurance premiums, including when they might be taxable and whether they are tax deductible.
  10. Retirement

    How to Choose the Best Long-Term Care Insurance

    Here's how to find and select a policy that provides the best coverage for you.
RELATED TERMS
  1. Insurance Premium

    The amount of money that an individual or business must pay for ...
  2. Experience Refund

    The portion of an insurance company’s premiums or profits that ...
  3. Experience Rating Insurance

    The amount of loss that an insured party experiences compared ...
  4. Assessable Policy

    A type of insurance policy that may require the policyholder ...
  5. Yearly Renewable Group Term Insurance

    A type of insurance policy purchased by employers to cover several ...
  6. Insurance Inflation Protection

    Insurance inflation protection is designed to allow policyholders ...
Hot Definitions
  1. Cyclical Stock

    An equity security whose price is affected by ups and downs in the overall economy. Cyclical stocks typically relate to companies ...
  2. Front Running

    The unethical practice of a broker trading an equity based on information from the analyst department before his or her clients ...
  3. After-Hours Trading - AHT

    Trading after regular trading hours on the major exchanges. The increasing popularity of electronic communication networks ...
  4. Omnibus Account

    An account between two futures merchants (brokers). It involves the transaction of individual accounts which are combined ...
  5. Weighted Average Life - WAL

    The average number of years for which each dollar of unpaid principal on a loan or mortgage remains outstanding. Once calculated, ...
  6. Real Rate Of Return

    The annual percentage return realized on an investment, which is adjusted for changes in prices due to inflation or other ...
Trading Center