Long term Care insurance is not suitable for everyone, but it can be an important part of ones financial protection portfolio. Unlike current Medi-Cal regulations, which cover only stays in skilled nursing facilities, the right long term care insurance policy can help people stay in their home and receive care in-place. This can include respite and supportive care for care-giving spouses and family members. Most of us would prefer to stay in our homes as long as possible to living in a nursing facility. Long term care insurance can help people do this. -Phil Lindsley

An Interview with David Miller:

Q: Many people are unclear as to what Long-Term Care Insurance is. Can you briefly explain it, and why it can be a good option for some? 

A: The primary reason people buy long-term care insurance is to help pay for the costs associated with a chronic health care condition. This could include expenses for home health care and other forms of community-based care; alternative living facilities, such as assisted living facilities and Alzheimer's facilities; and nursing homes. A policy owner is eligible for benefits when they are unable to perform a specified number of the “Activities of Daily Living,” which typically include bathing, dressing, transferring, toileting, continence and eating, or if they need substantial supervision due to a severe cognitive impairment. The cost for long-term care can be more than $7,000 per month in San Diego County*, so it is important to be prepared. By transferring the risk from the individual to the insurance company, someone can safeguard their family's financial security and maintain their standard of living in the event that they require care.

Q: Are there any things that our readers should be aware of or know before buying this type of insurance? 

A: With long-term care insurance, it is critical that you buy from a strong and stable company that will be there to pay the claim if you need it. The best thing a person can do is to check the third party insurance financial strength ratings of the company. The four main ratings firms are A.M. Best, Standard and Poor's, Fitch's, and Moody's. It is also important to work with a trusted financial professional with an understanding of your needs and goals, who can help explain the benefits and which features are right for you. Important features to address include the daily or monthly benefit, or how much the policy will pay, the benefit period, or the amount of time the policy will pay, and the elimination period, or how much time someone has to wait to begin receiving benefits. Additional benefits should be considered based on the individual's financial situation. 

Q: Is anyone eligible or does a person need to meet specific requirements? 

A: Unlike life or disability income insurance, there is currently no physical exam requirement. However, long-term care insurance underwriters will review the applicant's medical records, and in certain cases a face-to-face interview is required. 

Q: fifth Can you recall a situation where someone you know had LTC insurance that really benefited him/her? 

A: I've seen a claim by an insured person who is 36 years old. This individual was very forward-thinking. Thankfully, the policy is providing them financial options during a time of extreme mental and physical stress.

David Miller has been in the Financial Services industry for 5 years, and with Northwestern Mutual for 2 years. He holds his securities licenses in addition to insurance licenses, and is currently pursuing his Chartered Life Underwriter designation (CLU). He graduated from the University of California at San Diego with a Bachelor's of Science. When he's not helping his clients with their financial security, he enjoys world travel, surfing and spending time with his girlfriend.

Unfortunately, a diagnosis of a terminal illness often comes with many expenses. If you need money to pay for your medical care or comfort, you may be able to use your life insurance policy to get some immediate cash. "Viatical settlements" allow terminally ill individuals to sell their life insurance policies. Alternatively, some insurance companies allow you to receive an accelerated death benefit. 

A viatical settlement is similar to a life settlement, but it is designed for individuals that are terminally ill. You sell your policy to a company, which then collects the death benefit when you die. Most companies require that you have owned your policy for at least two years, your beneficiaries sign a release or waiver, you have a life expectancy of anywhere from two to four years (depending on the company), and you allow the company access to your medical records. 

A company will usually pay more than the cash surrender value, but less than the death benefit, although the exact price depends on a number of factors. In determining price, companies look at your life expectancy, how long you have had the policy, and the face value of the policy, among other things. 

Rather than selling your policy, some insurance companies allow you to collect a portion of your death benefit before you die. This is called an accelerated death benefit. This option may be included as part of your policy or you may have to pay extra for it. 

Accelerated death benefits are paid under certain circumstances, usually the onset of a terminal illness, the need for long-term care, or the diagnosis of a specified medical condition. The amount you can receive may be capped and you may be able to receive either a lump sum or monthly payments. Any remaining amount will go to your beneficiaries when you die. 
Both viatical settlements and accelerated death benefits could have tax consequences and affect Medicaid planning. Before taking either option, you should consult with a qualified elder attorney.