Most long term care insurance policies contain some sort of waiting period before the policy is triggered and an insured can begin receiving benefits. Insurers include these because much of the expense stemming from an illness or injury is usually realized up front – and the less the insurer may have to pay, the less your premium might be. Another factor in the price of your premium is the amount of time that they insurer will continue paying benefits. Bob Scott, a partner at the Advocate Law Group, explained both concepts.

Waiting periods

Waiting periods are an important aspect of the policy. Consumers should find out if they start collecting benefits the day they require some assistance and need in home care because they’re no longer able to bathe or care for themselves. Or is there a 30 day waiting period, a 90 day waiting period, a 120 day waiting period, 6 months or a year? The longer the waiting period, the lower the premium because the insurance company is not paying out on the first dollar. So, a waiting period helps people significantly reduce premiums.

Benefit periods

The second point is to find out how long the insurance company will be paying benefits? For example, if I (the insurance company) agree to pay benefits for up to a maximum of two years from the date the benefits start, I have significantly limited my potential exposure. On the other hand, if I agree to pay benefits for up to five years, I have two and a half times greater possible exposure. If I have lifetime benefits, I could have a much longer benefit pay out period and therefore I have to charge more premium. I would think most people would be far better off having a longer waiting period before the benefits begin and a much longer duration period for the length of time the benefits are payable.

Recommendations

While consumers need to weigh the pros and cons of both waiting and benefit periods, Scott offered the following recommendation, “The danger that people face is they might have a stroke rendering them disabled and that they may live a long time during which care is required. That could be a significant financial catastrophe. With that being said, I would suggest that most people consider a six month waiting period, but have the benefits payable for life.”