When looking for long term care insurance, another question you must ask yourself is, “How will I pay my premiums?” Most plans offer different options for you to be able to choose the one that works best for your situation. A few options available to you will be annual premium payment, 10-pay, pay to 65 and a lump sum payment.
Annual Premium payments are most like other insurance payments you have, such as automobile or health insurance. With this option, the insured pays their premium annually, semi-annually, quarterly or monthly, depending on the option chosen. Typically, if you pay on the semi-annually, quarterly or monthly basis, you will pay an additional fee that is waived if you pay just once a year. Also with this option, once a claim has been approved and the elimination period is satisfied, the insurer will usually waive the premium.
The 10-pay option means you pay a higher premium, but only pay for 10 years. After the 10 years of premium payments is complete, you will have no further premium due for the lifetime of the policy.
With the Pay to 65 options, you will pay a premium until the age of 65. After you reach the age of 65, you will have no further premium due for the lifetime of the policy. This option is popular because of the reduced income people have once they hit retirement.
The lump sum option is available to some consumers, where you pay a one-time, lump-sum payment and then never pay for your policy again. This is usually attractive to business owners due to the tax deduction for the year they purchase the plan. Long term care insurance that is asset-based is also paid for on a lump sum basis.
