L1: Long Term Care Insurance

Question 1

Long Term Care Insurance

Answer 1

cover cost when policyholder is unable to continue living independently due to advanced age

Question 1

Premiums

Answer 1

payable at regular intervals while insured is healthy and designed to remain same throughout term of policy.

Question 2

Premiums and Insurers rights

Answer 2

Insurer has right to increase premium for all policyholder, usually when benefit is much higher <- require approval from regulators

Question 3

Benefit triggers

Answer 3

triggered when policyholder cannot perform at least two of six daily activities of daily living (ADL)

Question 4

ADL’s

Answer 4

Activities of Daily Living

Question 5

Activities of Daily Living (6)

Answer 5

Bathing, Dressing, Eating, Toileting & Hygiene, Continuous bladder control, transferring/movement

Question 6

Waiting period

Answer 6

90 days, commence once benefit is triggered and waiting period is over

Question 7

Benefit term

Answer 7

2-5 years and selected by policyholder

Question 8

Benefit types (2)

Answer 8

Reimbursement
Fixed Annuity Payment

Question 9

Benefit Type - Reimbursement

Answer 9

made directly to caregiving organization to cover cost of providing appropriate care (in home / nursing)

Question 10

Benefit Type - Fixed Annuity Payment

Answer 10

made to policyholder regularly during benefit term, policyholder chooses what care the benefit will appply to

Question 11

Hybrid LTC & Life Insurance

Answer 11

Benefit paid using return of premium approach or accelerated benefit approach. Combine long term care benefits with death benefit of life contract

Question 12

Return of Period

Answer 12

any excess of total premium paid by policyholder over total LTC benefit that they received will be “returned” to policyholder as death benefit

Question 13

Accelerated Benefit

Answer 13

face amount of policy set at issue, LTC benefit paid from face amount (reduced overtime). If not exhausted will be paid as death benefit

Question 14

Extension Benefit Rider

Answer 14

extend benefit paid by 2 to 5 years after face is exhausted

Question 15

Off - period

Answer 15

determine if two periods of care are treated together or separately, usually 6 months for LTC

Question 16

LTC in Japan

Answer 16

may be on a stand-alone basis or as a rider on a whole life insurance policy. Benefits may increase when the level of dependency increases

Question 17

LTC in Germany

Answer 17

LTC coverage is integrated into the social health insurance provided by the government. Private LTC insurance can supplement or replace the public LTC coverage. Individuals who opt out of the state benefit also opt out of the tax supporting the benefit.

Question 18

LTC in France pay benefits in form of (2)

Answer 18

fixed or inflation-indexed annuity.

Question 19

LTC in France benefits based on (2)

Answer 19

Benefits may be based on “mild or severe dependency” or “severe dependency only.”

Question 20

LTC in France - Benefits: Severe dependency

Answer 20

bedbound or chairbound, needing constant assistance, or having a cognitive impairment requiring constant monitoring.

Question 21

LTC in France - Benefits: Mild dependency

Answer 21

conditions that require help with eating, bathing, and/or some mobility, but not being bed- or chairbound

Question 22

Premiums for LTC insurance policies in France are cheaper than in the U.S (4)

Answer 22

• Lower benefits
• Lower risk of payment due to the more stringent requirement of “severe dependency”
• Purchase of policies through group plans facilitated by employers
• Younger policyholder ages at issue

Question 23

LTC in the United Kingdom - immediate needs annuities

Answer 23

replaced regular premium LTC policies. Individuals pay a single premium to purchase a policy and then receive benefits as a regular fixed annuity paid directly to the care home