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[quote=Anonymous]The new policies are expensive but are a bit different than those available in the past. There are three types of LTC policies that I know of:

Type 1: A cash indemnity policy where you get a payout once you can no longer perform two activities of daily living — the money is yours to do whatever you want with it (Securian III is one of these I think). In other words, you don’t submit receipts. These are bought in increments of coverage like 5 years or 3 years.

Type 2: Traditional policies like the federal policy where you pay a yearly rate that can go up, but increases are regulated by the state. For these once you can no longer perform 2 ADLs and have LTC expenses, you submit receipts and get reimbursed by the policy.

Type 3: Hybrid policy that combines LTC with life insurance. You pay a fixed amount into the policy and then are done paying. This is a reimbursement policy where you would submit receipts, but if you don’t use the policy what you paid is payable to your heirs as a death benefit. Some offer unlimited lifetime benefits (OneAmerica).

Like all insurance it’s hard to talk about it as a “good deal” or not. If you have a family history of dementia, Parkinson’s or something like that it can be good to have a safety net. In DC the nice memory places cost $120k a year or more. People are living longer and it’s less likely family members can care for seniors at home because of modern life.

Probably most people can self insure in this area because it’s so affluent. But these policies are really for people who do the math and realize if they defy the odds they or their spouse might run out of money.[/quote]

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