Tuesday, August 16, 2011

Coming up short?

Maybe, maybe not:

We've written pretty extensively about Long Term care insurance (LTCi), but there's a new kid in town, goes by the name of Short Term Care insurance (STCi).

Issued by Banker's Life (#7 on the LTCi charts, and rising), it offers some interesting twists on the LTCi concept. For one thing, the maximum benefit amount available is $100, and there's no real "choice" in product design: there's a 30 day waiting (elimination) period and a maximum benefit period of 180 days My bad: the maximum daily benefit amount can be up to $200, and other elimination periods and benefit multipliers are available.

There's one inflation protection option (5% compound), and it's available as a facility-only or facility and home care plan.

Two things I really like about this design:

First, it's issued based on a "simplified underwriting" basis; that is, the application is fairly simple, with just a few "gatekeeper" questions. This makes it appealing for folks who may not qualify for a full-blown underwritten LTCi plan.

Second, it's a "pool" based plan. That is, once you settle on a plan, you're given a "pool" of money on which to draw, which makes it a little more flexible than it might appear at first blush.

Let's say you pick the $100 a day plan. That immediately gives you $18,000 worth of care dollars to play with. So let's say you're in a nursing home for 2 months (60 days), and the cost is actually $80 a day. Starting in the second month, Banker's would pay out $2,400 ($80 times 30 days), but you'd still have over $15,000 in your "bank."

Pretty cool.

Of course, it's not Partnership Compliant, but I'm of the opinion that, for folks looking at this kind of policy, that's not a major issue.

In any case, it's nice to see some outside-the-bun thinking.
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