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for your policyholder peer group if the insurer experiences a high level of claims. When investigating policies, beware of those that have an optional renewability clause. This option provides the insurer the ability to renew the contract, not you.

You also want to make sure that you understand the insurance company’s policy of preexisting conditions. While many contracts don’t have any language in them regarding preexisting conditions, others do. These clauses allow the insurer to not pay benefits for any physical or mental problems you had at the time you purchased the policy. Some policies have permanent preexisting clauses, while others will only keep them in force for 6 to 12 months.

When Do Benefits Begin? These days, long-term care policies have several definitions of when the insured person can begin receiving benefits. These are usually referred to as triggering events or definitions of disability. Many policies then follow a triple-trigger policy, which allows the person to be covered as long as they meet one of the following three conditions:

  • 1.

    The insured is unable to perform a specified number, usually two or three, of daily living activities. These activities come from a list and include walking, getting in and out of bed, eating, dressing, using the bathroom, and bathing. Some policies allow for certain cogni- tive abilities like short-term memory to be included in the list of daily activities, but many don’t.

  • 2.

    The insured has a cognitive impairment, which typically means the deterioration or loss of the individual’s intellectual capacity. This will be measured by clinical evidence and standardized tests. Parkinson’s Disease and Alzheimer’s Disease are examples.

  • 3.

    A physician certifies that the insured needs long-term care as a medical necessity. This condition can be very liberally applied since the individual’s own doctor is usually the certifying physician. The use of all three conditions is the most beneficial to the per-

son purchasing long-term care insurance, but most insurance compa- nies only use the first two benefit triggers.

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