What are the types of care?
A common misperception is that long-term care means staying in a nursing home. Today, there are other care options available. Long-term care services can be divided into two types of care: home and community care and facility care.

Here are some examples of each type of care:

Home and Community Care Facility Care

Home health care
Informal (Custodial) care
Homemaker service
Hospice care
Adult day care

Residential care facilities
Nursing homes

Most LTC policies pay the insured a fixed benefit each day services are rendered, regardless of what the care costs. For example, if the fixed benefit is $150 per day and the care provider charges $140 per day, the insurance company will pay the full $140 per day.

Practice Question:
Which of the following statements about long-term care insurance policies are correct?
I. Coverage periods generally extend from two to six years, but can be lifetime
II. Long-term care policies sold today must be guaranteed renewable.
III. A long-term care policy with a long probationary period will have a lower premium than one with a shorter probationary period.
IV. Premiums for a long-term care policy are based solely on the insured's age, health and the type of benefits provided.

A. II and IV
B. I, II and III
C. IV only
D. I and III E. I, II, III and IV

Answer: B
All are correct statements except VI. Premiums can also be based on the length of coverage (five years, lifetime), amount of benefit per day, cost of living riders added to the policy, and many other factors.


Health and Property Insurance

Related Articles
  1. Financial Advisor

    Advising FAs: Explaining Long-term Care Insurance to Clients

    As our life spans are extended, our family structures change and medical care improves, the need for long-term care (LTC) will continue to increase.
  2. Financial Advisor

    Long-Term Care: How and Why You Should Plan for It

    The likelihood of needing long-term care is higher than most people realize. Here are some ways to plan for it.
  3. Insurance

    Long-Term Care Insurance: Who Needs It?

    No one is immune to the possibility of one day needing long-term care - and the costs can deplete a life savings.
  4. Financial Advisor

    Long-Term Care Policies: Why They're Worth It

    Long-term care insurance can be a godsend for those who need it for an extended period of time. Read on for more about this long-term care option.
  5. Financial Advisor

    Can Long Term Care Insurance Be Affordable?

    The cost of managed care and insurance covering it will only become more expensive. Here's how to help your clients formulate a plan.
  6. Insurance

    Long-Term Care Insurance: What to Consider

    Long-term care may be a wild card in your financial plan, but at the very least, it should be discussed with your financial advisor.
  7. Insurance

    The Good News About Long-Term Care

    Two options have emerged that allow long-term care policyholders to gain control over premium increases.
  8. Financial Advisor

    The 4 Best Alternatives to Long-Term Care Insurance

    Understand what long-term care insurance is and the types of people who need this coverage. Learn about four alternatives to long-term care insurance.
  9. Financial Advisor

    Taking The Surprise Out Of Long-Term Care

    Don't be caught unprepared - find out what to look for in LTC insurance policies.
Frequently Asked Questions
  1. Depreciation Can Shield Taxes, Bolster Cash Flow

    Depreciation can be used as a tax-deductible expense to reduce tax costs, bolstering cash flow
  2. What schools did Warren Buffett attend on his way to getting his science and economics degrees?

    Learn how Warren Buffett became so successful through his attendance at multiple prestigious schools and his real-world experiences.
  3. How many attempts at each CFA exam is a candidate permitted?

    The CFA Institute allows an individual an unlimited amount of attempts at each examination.Although you can attempt the examination ...
  4. What's the average salary of a market research analyst?

    Learn about average stock market analyst salaries in the U.S. and different factors that affect salaries and overall levels ...
Trading Center