Long Term Care Insurance

A Insurance Article Contributed by Deepak Cutting

Basic Concept of long Term Insurance

The long-term care insurance policy provides personal care if and when the policyholder becomes functionally incapacitated. Whereas traditional medical treatment deals with physical problems directly and attempts to rectify them, long-term care services assist the person to perform usual daily activities and maintain a normal lifestyle to the extent possible, in spite of that person's physical impairment. Such assistance could be provided at home, at an adult day care center, a nursing home or an assisted dwelling.

Depending on the type of care needed, the cost of such assistance could exceed $150 per day. Skilled services such as nursing or physiotherapy or nursing home stay would cost more than personal care services.

Individuals with low incomes are generally provided such care through 'Medicaid' a state funded program. For others, long term care insurance policy can pick up the bill, if such insurance is in place. Many people pay for such care out of their own pockets till their assets are sufficiently depleted for them to qualify for Medicaid, or cross the age of 65 to be entitled to Medicaid. Medicaid covers the cost of skilled assistance and care in approved nursing homes, under certain conditions.

Who Should Buy long Term Care Insurance?

Such insurance protects your assets from depleting on account of extended medical and allied care. Such insurance makes sense only if your assets exceed your home, your car and a small amount of cash. Further, for people with low incomes and assets, long term care insurance policies may not be affordable. Your specific financial position must be kept in mind when deciding on investing in a long-term care insurance policy.

The 'risk factors' necessitating such an insurance cover are as follows:

· Life Expectancy: Longevity necessitates long term care. Consider your family history for long life.

· Gender: Women live longer than men, on average.

· Family situation: People without a spouse or grown up children are more likely to need long term care insurance.

· Your health: If there is a family history of chronic, disabling ailments, you are at a greater need of such insurance.

Types of long Term Care Insurance Policies

Different insurance companies provide a varied mix of benefits and coverage. The individual must pick that insurance policy that is effective and affordable to him or her. The most common benefits in a typical long-term care insurance cover are nursing home cover, home health care & adult day care. Care must be received in licensed nursing or assisted living facilities or through licensed home health or adult day care agencies.

Long-term care insurance can also be purchased as a group, typically through your employer or a club member or member of a professional organization. When purchased as a group, the insurance policy is generally at reduced cost.

Tax Benefits

All policies sold on or after January 1, 1997, must be identified as either tax-qualified or non tax-qualified. All policies sold before January 1, l997, are automatically "qualified." The insurance policy document will display a statement similar to the following, if that policy is qualified.

"This policy is intended to be a qualified long-term care insurance contract as defined by the Internal Revenue Code of 1986, Section 7702B(b)."