LTC Guru's - Help Me Understand the Monthly Benefit

[Full Throttle]

I just started selling LTCi last year, but suprisingly, this question has never come up until last night:

A client buys a United of Omaha LTC policy with a $5,000 monthly benefit for 5 years. The total potential benefits are then $300,000 (no inflation benefit to keep it simple). Let's say the client qualifies for a claim in the future, but only needs $3,500 per month first year before moving into a nursing home and needing the full benefit after the first year.

Here's my question: Does the client lose the $18,000 in monthly benefits he did not use the first year ($5,000 benefit - $3,500 used over 12 months)? Or does it stay in the pool and the client can actually use it beyond 5 years until the pool is gone?

 

[Mr_Ed]

I just started selling LTCi, but suprisingly, this question has never come up until last night:

A client buys a United of Omaha LTC policy with a $5,000 monthly benefit for 5 years. The total potential benefits are then $300,000 (no inflation benefit to keep it simple). Let's say the client qualifies for a claim in the future, but only needs $3,500 per month first year before moving into a nursing home and needing the full benefit after the first year.

Here's my question: Does the client lose the $18,000 in monthly benefits he did not use the first year ($5,000 benefit - $3,500 used over 12 months)? Or does it stay in the pool and the client can actually use it beyond 5 years until the pool is gone?

This article does a good job of explaining it.

Will my long-term care policy stop paying benefits at the end of my “Benefit Period”? « LTCShop.com

nadm

 

[Full Throttle]

That's what I was looking for, thanks.

 

[TriciaS]

A great way I explain it to clients is you have purchased a checking account with a monthly ATM withdrawl limit. If you don't withdrawl the full amount each month, the money remains in the account. But you still can't go over your limit next month, it just makes the account last longer. Consumers can relate to that.

 

[Justin Bilyj]

Great value to add on your first post Tricia!!

 

[Arthur Rudnick]

An easy explanation is this:

If someone has a 5-year benefit period and $6,000/month in benefits and they only used $3,000/month, the policy woiuld last 10 years.

$6,000/month x 5 years is the same amount of money as $3,000/month for 10 years.

 

[CALTCAgent]

A great way I explain it to clients is you have purchased a checking account with a monthly ATM withdrawl limit. If you don't withdrawl the full amount each month, the money remains in the account. But you still can't go over your limit next month, it just makes the account last longer. Consumers can relate to that.

I like that!

Nice and simple.