Ch7: LTCI Flashcards
1
Q
Definition of LTCI
A
All forms of continuing personal or nursing care and associated domestic services for people who are unable to look after themselves without some degree of support, whether provided in their own homes, at a day center, or in a state-sponsored or care-home setting
2
Q
Costs can be divided into
A
- living costs
- housing costs
- personal care
3
Q
Other LTCI benefits
A
- fixed number of monthly benefits to cover the cost of any assistive devices
- provision of independent care advice at the point of claim
4
Q
Methods of funding
A
- single payment
- regular payments
- restricted regular payments (at a certain age or defined level of disability)
- retrospective repayment, from the equity released after the sale of the home
5
Q
Advantages of cash policy for company
A
- don’t need to estimate future claim amount
- smaller contingency loads; more attractive
- don’t need to organise contracts with care providers
6
Q
Disadvantages of cash policy for company
A
- policyholder may believe that benefits are comprehensive leading to complaints
- complaints may lead to insurers having to pay claims that were not allowed for in the premium basis
- threat to reputation
7
Q
Advantages of cash policy for insured
A
- choice that cash presents (type of care & provider or holiday)
- premiums cheaper
8
Q
Disadvantages of cash policy for insured
A
- amount of cash may be inadequate to purchase all the care that is needed (nature of condition or costs of care have escalated)
- inexperienced in buying care and unaware of the alternatives. Care may be inadequate or inappropriate
9
Q
Death benefit possible
A
- minimum payment period
- amortising single premium
- providing capital protection of part of the single premium
10
Q
Multiple state model states
A
- healthy
- needing own-home care
- needing residential home care
- needing nursing home care
- withdrawn
- dead
11
Q
Capital requirements
A
Could be comparable to those for endowment assurance or other type of investment contracts, but will depend on the nature of the contract and any guarantees given.
