How Does Long-Term Care Insurance Work? Long-term care insurance can help protect your savings, spare your loved ones a lot of stress — financial and emotional — and keep you in the driver's seat when it comes to decisions about your care. It typically covers things like in-home help, adult day care, assisted living, nursing homes and memory care units.
 There are three main kinds of LTC coverage: traditional, hybrid and life insurance with a long-term care rider. These days, most people end up with a hybrid plan that includes life insurance. The earlier you start shopping — think 40s or 50s — the better the rate you'll get.
What is an elimination period?
Before benefits kick in, you'll have to go through what's called an elimination period. This is basically a waiting period. If it's based on calendar days, the countdown starts as soon as you're diagnosed.
If it's based on days of service, only the days you actually receive care count. Most policies have a 90-day elimination period.
To qualify for benefits, a licensed health professional needs to confirm that you have a chronic health condition that qualifies. You also have to show that you can't do at least two basic daily activities on your own — things like eating, bathing, dressing and moving around safely.
What conditions qualify?
Every insurer has its own list, but common conditions that usually qualify for long-term care benefits include:
- Alzheimer's or other types of dementia
- Stroke
- Parkinson's
- Cancer
- Rheumatoid arthritis
Basically, anything that results in a serious, lasting decline in your ability to care for yourself could trigger the coverage.
How the money gets to you
There are two main payout types:
- Indemnity: You get a set monthly amount to spend however you need.
- Reimbursement: You pay the bills and send in the receipts, and the insurer reimburses you for what qualifies.
Most modern LTC policies include a life insurance component and may offer optional add-ons like inflation protection (so your coverage amount grows over time).
Making a claim
Before filing a claim, double-check that you've met the elimination period and all other requirements. If you're good to go, request a claim packet from your insurer. It'll have forms for both you and your doctor to fill out. From there, the insurer reviews everything and decides whether you're eligible to start receiving benefits.
Are there alternatives?
Yes — but they come with trade-offs:
- Stand-alone LTC policies: These still exist, but they're pricey. A policy worth $165K for a 60-year-old man runs about $1,175 a year — and that cost goes up with age and health conditions.
- Life insurance loans: If you've got a permanent life insurance policy with cash value, you could take out a loan against it to pay for care. Just know that any unpaid balance will come out of the death benefit your beneficiaries receive.
- Critical/chronic illness riders: These can cover care if you become permanently disabled and can't manage two or more daily living tasks on your own.
Before buying a policy with a long-term care rider, make sure you read the fine print and get all the details. Coverage amounts, qualifying conditions, waiting periods and payout methods can vary a lot from one policy to the next.
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