Long-Term Care Insurance:
What is Your Elimination Period?
IMPORTANCE RATING: 1
Also known as the deductible, the
elimination period is similar to deductibles with other types
of insurance coverage, such as your automobile or homeowner's. But
instead of being defined as a dollar amount, the elimination period for
long-term care insurance is defined in days between the time
you begin you begin to need care and the time the policy begins to pay
benefits.
For example, if you need long-term care
services, and you had purchased coverage with a 100-day elimination
period, on the 101st day of your need for care the policy would begin
to pay the benefit amount.
The more days that you are willing to pay for your care out of pocket
before your policy begins paying benefits, the lower your premium rate.
You can choose a variety of elimination
periods, ranging from 0 days to as high as 730 days or longer.
There are various methods for calculatin
how the elimination period is satisfied. Some insurance companies use a
calendar day method, whereby your
elimination period begins on the day you begin to need care and every
day counts, even if you do not receive care on every subsequent day
thereafter.
Other companies use a days of
service method , whereby an elimination period day must be
a day that care was actually received. In the overall picture of LTC
insurance policy design, the method used is a minor consideration.
The elimination period is the most practical
way to save money on your premium. Without sacrificing significant
benefits, an elimination period in the range of 100 days can save a
significant amount of premium dollars.
How to
Determine Which
Elimination Period is Appropriate for You
In determining the elimination period most appropriate for your
situation and how that translates into out-of-pocket dollars, consider
2 important points:
1. Your risk tolerance philosophy
and whether or not you believe in co-insuring a small or large amount
of your potential long-term care costs
2. The average cost of care in
your area. (Click
here for Cost of Care Map) Use this figure to calculate your
out-of-pocket dollar risk for various
elimination periods by multiplying the elimination period by the
average
cost of care in your area.
RECOMMENDATION:
Since true long-term care is needing
assistance for 100 days or more , we recommend that you
choose an elimination period of at least 30 days.
Return
from What is the Policy Elimination Period to
Customizing Your Long-Term Care Insurance Coverage
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