LTCI Partners Sales Consultant, Allison Hansen addresses a question frequently asked by financial advisors: "When should I recommend a monthly benefit vs a daily benefit?
I often get the question from advisors as to which is better: daily reimbursement or monthly reimbursement? My answer is always, “it depends”, and here’s why. Monthly reimbursement is more flexible. If someone has a $6,000 per month benefit, they could have expenses one day of $100 and the next day $300, and it would all be covered as long as their total expenses for the month did not exceed $6,000. A comparable daily benefit of $200 in this case would mean that if expenses one day were $300, the insured would be out of pocket for that $100. Monthly reimbursement traditionally cost 4-6% more than daily benefits, but I think that is worth it when the insured purchases a benefit equal to or greater than the cost of care in their area.
I prefer to quote daily benefits if a) the insured is price very sensitive or b) the insured is looking at reimbursement amounts lower than the actual cost of care. Let’s use the example of $50 per day or $1,500 per month. If this insured went on claim with a monthly benefit of $1,500, they could potentially use up all of that money in the first week and be forced to pay the remaining 3 weeks out of pocket. If this insured had a daily benefit of $50, they would get this money evenly spaced out throughout the month and therefore be better able to budget and plan for the money they will be paying out of pocket.
There really is no right or wrong answer as to which reimbursement option is truly the best for you, but please take information like this into mind when investigating LTC Insurance.
Since the majority of care received is at home, monthly benefits allow for more flexibility. I do agree that each situation is different and you need to know the client's goals before recommending a plan.
Posted by: Pat | May 04, 2011 at 07:35 AM