Pros & Cons of Long-Term Health Insurance

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Long-term care insurance is typically purchased by individuals to protect their children and to not be a burden if they can no longer care for themselves. A policy can pay for care that is provided in an assisted living facility, a nursing home or in an individual's own home. This type of insurance policy can have many benefits and even some drawbacks depending on various factors. The biggest concern about purchasing a policy is the cost of providing care for an individual.

Purpose

  • The purpose of long-term care insurance is to provide protection if an individual becomes disabled or can no longer care for themselves. Many individuals who purchase long-term care insurance want to maintain their independence as they age and not become a burden to their children. Coverage for a long-term care policy will pay for various types of care that have not been specifically excluded on the policy.

Benefits

  • Long-term care policies have many benefits, which include using this type of policy as a financial safety net. This type of policy will pay for care that is needed without having to draw funds from savings or retirement funds to provide for care. Another benefit is there are no medical exams that are required, and policies are guaranteed renewable. This means that an insurance company will not cancel a policy as long as the premium is paid on time.

Coverage

  • Individuals that purchase a long-term care insurance policy are provided coverage when they can no longer perform at least two activities of daily living. Two of the most common daily activities of an individual include dressing and bathing. Long-term care policies will provide for care that is received in a licensed nursing home or assisted living facility from skilled or nonskilled nursing care and from home health agencies that are Medicare certified.

Limitations

  • Many long-term care policies have benefit limits that are capped at a maximum dollar amount. This can include an amount such as $100 per day for a period of up to 5 years. Long-term care policies also have a maximum benefit period that can consist of a single benefit period, such as 5 years. A policy may also have various "periods of disability" in which multiple nursing home stays can be covered within the maximum benefit period.

Exclusions

  • Long-term policies have exclusions that may apply that are similar to exclusions that are found on other types of policies. Typical policy exclusions for long-term care insurance include certain types of mental and nervous disorders. Coverage is also not provided for individuals who suffer from alcoholism and drug abuse. Another policy exclusion that can be found on a long-term care policy is providing for care when an injury is self-inflicted.

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