Understanding your policy shouldn’t be overwhelming. Here’s a guide to the most important terms you’ll come across when exploring or purchasing long-term care insurance (LTCI), so you can feel confident in your choices.

Activities of Daily Living (ADLs)

Basic tasks used to determine eligibility for benefits. These include:

• Bathing
• Dressing
• Eating
• Toileting
• Transferring (e.g., getting in and out of bed)
• Continence

Most LTCI policies begin paying benefits when you’re unable to perform 2 or more ADLs without assistance.

Benefit Amount

This is the maximum amount your policy will pay for care—per day, per month, or in total. For example, a policy might pay up to $150 per day for home care or assisted living.

Benefit Period

The length of time your policy will pay benefits once you start receiving care. Common benefit periods range from 2 to 5 years, but some policies offer lifetime coverage.

Care Coordinator

Many LTCI policies include access to a professional who helps you and your loved ones find and coordinate care providers, manage services, and monitor care quality.

Cognitive Impairment

Conditions like Alzheimer’s or dementia that affect memory, reasoning, or judgment. Many policies will begin paying benefits for cognitive impairment even if you can still perform your ADLs.

Comprehensive Coverage

A policy with comprehensive coverage pays for care in a variety of settings, including your home, an assisted living facility, or a nursing home.

Elimination Period

Think of this like a deductible but measured in time instead of money. It’s the waiting period (often 30, 60, or 90 days) between when you start needing care and when your policy begins paying benefits.

Guaranteed Renewable

Your insurer cannot cancel your policy as long as you continue to pay your premiums on time, even if your health changes.

Home Care Benefit

Many policies include coverage for care services provided in your home, allowing you to remain independent longer. This can include help with daily activities like bathing, dressing, or eating.

Indemnity Policy

Pays a fixed daily or monthly benefit regardless of your actual expenses. As long as you qualify for benefits, you receive the full amount, which gives you more flexibility.

Inflation Protection

Since care costs rise over time, inflation protection is an optional policy feature that helps your benefit amount grow each year to keep up with the rising cost of care. This is especially important if you’re buying coverage at a younger age.

Non-Forfeiture Benefit

This feature allows you to keep some level of coverage if you stop paying premiums after a certain number of years, rather than losing your policy entirely.

Premium

This is the amount you pay for your policy, typically on a monthly, quarterly, or annual basis, but sometimes as a one-time payment. Your premium is based on your age, health, coverage level, and policy features at the time of purchase.

Reimbursement Policy

Pays for actual long-term care expenses up to your policy limits. You’ll typically need to submit receipts or invoices to receive reimbursement.

Shared Benefits

If you’re buying coverage with a spouse or partner, some policies offer a shared benefit pool that gives you both access to each other’s unused benefits.

Tax-Qualified Policy

A policy that meets federal standards for favorable tax treatment. Benefits paid are typically not taxed as income, and premiums may be tax-deductible depending on your situation.

Waiver of Premium

Once you start receiving benefits, this feature allows you to pause premium payments, saving you money while you’re using the policy.

Not sure what it all means for you?

That’s where we come in. Our experienced LTC Advocates are here to explain your options in plain language, answer your questions, and help you understand how different terms apply to your unique situation. Speak with an LTC Advocate today to get started.