What Is “Long Term Care”?

Long Term Care is a benefit designed to cover costs for insured as they become disabled, usually from the natural aging process.  It provides funds either directly to caregivers (including family members in some cases) or to facilities so the person may maintain a quality of life.

With the aging Boomer population the benefit of this type of care is becoming more visible as a need rather than a want.

How Does Long Term Care Coverage Work?

When a person has lost certain capabilities, referred to as Activities of Daily Living (ADLs), these plans and programs allow for outside care to come in or for the person to have some assisted living arrangement covered.

This is fundamental especially in light of COVID-19 and is an important part of estate planning, as Medicaid for nursing home benefits will only kick in after all assets have been exhausted.

Our three part series on the topic is essential reading for anyone considering this type of benefit including family members who wish to maintain a healthy lifestyle for loved ones.


Important Points

  • Plans have a monthly premium subject to increases
  • Premiums are higher for tobacco users
  • Acceptance is not guaranteed
  • Plan designs are over a time period
  • There is a waiting period before benefits begin
  • Lapse of coverage or lack of use is a total loss of paid in premium in most cases

Asset Based

Important Points

  • May use life insurance or an annuity as a foundation
  • Can be structured for a lifetime benefit and include spouse
  • Healthy persons better off with life insurance types
  • Can be used for in home care including by family members
  • Unused benefit at passing transfers to beneficiary

Prepaid Home

Important Points

  • Plans have a monthly premium based on hours of care
  • Care is usually custodial
  • Premiums can be discounted if use is deferred 
  • Caregivers may be friends or professionals
  • No age limits or medical underwriting
  • Access to care is not limited by location

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