What is the difference between "long-term care" insurance and "chronic disease" insurance in the United States?How to make a claim?

In insurGuru©️Life Insurance AcademyIn the previous tutorial, the American Life Insurance Guide introduced the use of "Policy + additional terms"The basic principle of matching design to provide policyholders with more protection and benefits.

In real life, some life insurance company policies will provide Additional terms for chronic diseases,or Long-term care additional terms For policyholders to choose.In the American life insurance market, separateLong-term care insurance, Is also a common type of sales insurance, mainly used for care needs after retirement.

In the process of applying for insurance, faced with different companies and different market personnel, they said something and paid attention to "Pay for care"The policyholders of this issue are often very confused.

That in the U.S. insurance industry "Long-term care insurance" with"Chronic illness benefits"What is the difference between the two? How are they added to the policy? Which ones require additional payment? Which one should we buy to cover the care costs? Which one is more suitable? American Life Insurance Guide.Columnist HeatherWrote this article to explain this issue.

What is long-term care insurance?

Long-term care insurance,English called Long Term Care Insurance, Is an insurance product on the U.S. market, it is used to help pay for "Long-term care"The costs associated with this service.

This insurance product appeared in the late 70s, but there was not much market response at that time.Until the late 80s and early 90s, due toImproved life expectancy, Family care, adult day care, and the rise of assisted living communities have drivenLong-term care insuranceIt became a "necessity" at the time.

When applying for a long-term care insurance policy, it will agree to pay in the following three ways:

• If eligible for compensation, the insured needsLong-term care services, Then the insurance company pays for this service.This is currently the most important form of compensation for long-term care policies.
• If the compensation conditions are met, the insurance company shall pay a fixed amount of money in accordance with the policy agreement.It has nothing to do with specific nursing service fees or expenses.
• If the compensation conditions are met, such as disability, even if long-term care services are not used, insurance companies will pay compensation regularly, such as daily, weekly, and monthly payments.

Traditional long-term care insurance VS emerging hybrid policy Hybrid

According to data from LIMRA, in 2000, the above-mentioned traditionalLong-term care(LTC) The annual sales of insurance policies reached 750,000.But in 2017, the annual sales volume of this type of traditional long-term care (Traditional LTC) insurance was only 70,000, and the market sales plummeted by 90%.

What happened in the middle?With the fierce competition in the U.S. insurance industry and the revision of related laws and regulations, the benefits of "compensating care costs" have finally beenInsurance companyPackaged as a hybrid life insurance policy (Hybrid), or an additional clause for annuity products, is put into the market.

According to data from LIMRA during the same period, in 2017, the annual sales of hybrid life insurance policies (Hybrid) with the function of "compensating for long-term care costs" reached 260,000, and 25% of life insurance policies in the United States added insurance fees to pay for those who applied for this. Products.

Life insurance companies on the market mainly provide this benefit in the following three ways:

1. Use "Chronic Illness Accelerated Death Benefit Rider / Chronic Illness Benefit Rider" to "compensate long-term care costs."— This way is what we usually say "Additional terms for chronic diseases". If the insured meets the contractual claims determination conditions, the insurance company will pay the insured to the insured according to the agreed cycle.The policyholder can control the use of the money¹.This money is taken out of the death benefit in the insurance policy, therefore, the death benefit amount of the insurance policy will be reduced.At the same time, because the money was withdrawn from the insurance policy death compensation "in advance", no "new" money appeared, soIt is not and does not belong to long-term care insuranceThe concept of identification.
2. Use "LTC Rider" to "compensate long-term care costs."— In this way, the traditional long-term care insurance policy is added as an additional clause to a life insurance policy for the insured to choose.Long-term care additional clauses are usually paid in the form of "reimbursement" or "cash settlement", based on actual monthly expenses.This method is used to purchase a guaranteed and confirmed long-term care claim amount at the time of insurance. Usually, this long-term care claim amount is equal to the death benefit.In the case that the long-term care benefits are not used up, the insurance company will continue to pay. This is an important difference from the "chronic disease additional clause" payment situation, which is described in detail below.It is usually a toll Additional terms require additional costs, and only some life insurance companies provide this method.
3. New Hybid long-term care insurance—This way, usually a life insurance, orAnnuity insuranceA combination insurance product with long-term care additional clauses.This type of product specifically addresses the long-term care needs of middle-aged and elderly people.It combines the advantages of traditional long-term care insurance with the advantages of life insurance. It can not only achieve long-term care claims for life, but also enjoy partial tax deductions for insurance premiums.

The similarities and differences between the two methods of claim settlement

Fundamentally speaking,Additional terms for chronic diseases 和 Long-term care insurance The key identification factors for claims are the same.

Chronic illness payment additional clauses and long-term care insurance are both used The number of activities out of the six "Activities of Daily Living (ADLs)" (usually two) cannot be performed normally, To be used as the criterion for payment judgment.

For example, some long-term care policies, such as the American Life Insurance Guide.Recent reportYes, the universal long-term care insurance policy operated by the Washington state government uses any of the six “activities of daily living (ADLs)” that cannot be performed normally.Three activities To be used as a criterion for payment judgment.

However, most American life insurance companies that provide additional clauses for chronic disease compensation are unable to normally perform any of the six “activities of daily living (ADLs)”.Two activities To be used as the criterion for payment judgment (the specific details are subject to the actual terms of the insurance policy).

As an insurance applicant, in the actual application process, you need to understand the specific compensation judgment standards of different insurance companies in different states.

Advantages and disadvantages of additional terms

To "Early withdrawal of death compensation for chronic diseases"Such additional clauses for claim settlement,The amount of the claim is uncertain, And determined by the insurance company, this method is called a "discount" method of claim settlement.The advantage is that it is cheaper. Usually, the insurance company gives it as a gift in the insurance policy and sets a maximum claim limit or proportional limit.

To "Long-term care additional terms"Such additional clauses for claim settlement,The total amount of the claim is determined at the time of insurance.This is its biggest advantage for "guarantee".Some excellent Hybrid long-term care insurances on the market have achieved life-long claims, and the amount of claims can exceed the amount of death compensation, and there is no upper limit on the payment.

For retired people, if there is a clear need for long-term care, they can consider professional long-term care.Hybrid long-term care insurance.

(>>>Recommended reading:Long-term care insurance in the United States introduces the price advantages and disadvantages of the claims must read and purchase age window）

insurGuru©️ article summary

In order to meet the "long-term care cost compensation" demand that policyholders care about, the American insurance market provides different options.This article shows the industry development and current solutions for this demand in the past 20 years from the perspective of policy history, function development, and actual market sales data.traditionalLong-term care insuranceIt is declining, and hybrid life insurance policy products that provide this benefit with additional clauses and the more powerful Hybrid long-term care policy products have gradually won the market.We look forward to the emergence of more excellent products on the market, bringing more benefits and choices for policyholders.

(American Life Insurance Guide Network insurGuru©️ column)

appendix

¹The terms and conditions of the payment for chronic diseases and the conditions of use and use vary with different insurance policies and the laws and regulations of different states.For example, Massachusetts stipulates that early claims for chronic diseases can only be used for qualified long-term care services.
*Long-term care/long-term care and long-term care insurance/long-term care insurance are two different concepts. The former refers to a series of services, or behaviors, while the latter refers to a specific policy product.