Long Term Care Insurance Benefit Period
The benefit period is the amount of time your policy will pay out from the point of claim. These benefit periods range from 2 years up to unlimited or lifetime policies. The bulk of LTCi policies offered today are what they call "pool of money" or "bucket of money" concepts. This means that they take the daily benefit amount purchased (for example $200 a day) and multiply it by the amount of days in the benefit period (for example in a 5 year policy, it would be 1825 days).
What you are left with is basically a bank account of $365,500 - for this example. If you use your full $200 every single day for the full five year period, your benefit ends. But, if you only end up using $100 a day or $200 a day but only three times a week, your benefit could last you 10 years! The money just sits in the account, waiting for you to use it.
The benefit period you purchase is actually the minimum amount of time your policy would pay in the "pool of money" type contract.
Average Benefit Periods
The average nursing home claim is 2 and a half years and the average home care claim is just over 4 years. It is important to look at your own family history as well as your current age and health status in addition to how much money you are willing to spend when choosing a benefit period. The newest statistics show that 91% of all people will have a claim that is 5 years or less in duration, so the bulk of people could satisfy the need with a five year benefit plan.
Making the Best Choice for Your Benefit Period
There is no perfect choice. It really depends on the buyer. We strongly recommend you speak with a Long Term Care insurance specialist that can help review your personal and family history and help you choose the right benefit period for you.