Different Types of Long-Term Care Insurance (LTCI) Policies

You’ll have to decide the type of insurance product you want to purchase. Depending on the type of policy you select, there may be a significantly different type of health benefit structure. This is a key factor that determines the complexity.

– Individual and Group Coverage: This is a common choice for a lot of people. They choose a freestanding LTCI policy that comes with only long-term care benefits. Anyone can apply for an individual commercial LTCI policy. But it’s good to know that many people are also eligible for a group product that is sponsored by a private or public employer, a faith-based organization or an association. Group policies are usually less expensive. The medical underwriting is less stringent as well.

– Partnership Policies: Those who are from one of these four states (Connecticut, Indiana, New York, and California) may also select a partnership policy. This lets them retain a specified amount of their assets if they qualify for Medicaid after using up their entire insurance benefits. There are businesses selling partnership policies in these four states that also sell individual commercial products that compete with their own partnership offerings. Congress has also passed the Deficit Reduction Act that has expanded the partnership option to all interested states. Many new partnership programs are being adopted in the other states as well.

Consumers can select from six different LTCI programs. It all depends on the person’s own or a spouse’s eligibility for one or more group programs or products. Choices might include (1) the federal LTCI program for current or former federal workers, (2) a state public employee program, (3) a private employer-sponsored LTCI program, (4) an association- or faith sponsored group coverage, (5) an individual, commercially sold LTCI product, or (6) a partnership policy. These products are different from each others. Many people are not adequately informed and they cannot thus decide, thus adding to the confusion.


Consumers can select a policy which offers LTC benefits together with a life insurance or annuity policy.

– A life insurance policy accelerates payment of the death benefit. It gives funds that can be used to pay for care as mentioned in the policy. The life policy may also include a rider for LTCI benefits. This is similar to the stand-alone LTCI policies. The benefits of an LTCI rider are typically paid after the accelerated payment for the death benefit is exhausted.

– An annuity can also include a rider for LTCI. The LTCI rider benefits are paid after the cash value in the annuity is exhausted.

There is a long waiting period before the benefits of the LTCI rider is triggered in both the annuity and accelerated life insurance death benefit. In some of these products, you’ll have to pay a single lifetime premium up front, and in others, you’re asked to pay the premium over a pre-decided number of years. No premiums are due after this.

Some individuals, particularly young people often worry about paying premiums for a longer time, and that too for benefits they might never have to use. They often like to combine because it makes sense to them.


LTCI policies will typically offer benefits for different combination of assisted living, community and home care, and nursing home care. Consumers have the option of limiting benefits to some types of care or they might go for a comprehensive plan of benefits. Products are usually marketed in three different ways:

– Comprehensive policies provide benefits for services at all levels of home, community-based and institutional care.

– Facility-only policies pay just for care within the institutional setting such as a nursing home. But there are policies that also include care for assisted living. It depends on how the care is defined in the policy.

– Policies just for home-care give benefits only for home care, and in some instances community-based care (like adult day care) as well. It depends on the state requirements where these policies are sold.

Most people who buy facility-only policies are usually worried about the high cost of nursing home care. They believe that it might be difficult to afford a comprehensive coverage plan.