How is the level of benefit determined ?

Posted by admin On December 23rd 2020

The amount of benefit paid out from an LTC plan is dependent on the level of care required by the person insured.

This is established by looking at the person’s ability to carry out a number of activities of daily living (ADLs) such as dressing, preparing food, feeding, washing, moving from room to room, using the toilet, etc

Each insurer has its own definitions of what constitutes an inability to carry out any of the above. Many follow the definitions laid down by the Association of British Insurers. The higher the number of ADLs that cannot be performed without assistance, the greater the amount of care required and, ultimately, the higher the level of benefit paid. Usually, insurers require that the insured person must be incapable of performing at least two or three of the above before a claim can be made.

A person might just need basic assistance with dressing and with preparing and eating meals and need not be in a nursing home to receive LTC benefits. In this situation, they might need a carer coming in at certain points during the day specifically to help the person carry out those tasks.

Pre-funded care and Immediate care are the two types of insurance policy available.


Immediate care plans are for when the person didn’t have cover in place but found themselves needing care immediately. An annuity can be purchased using a lump sum, which then would be used to make the necessary payments for the care required.


Pre-funded care plans are such whereby the person pays premiums into a plan whilst they are still in good health, to prepare to cover the cost of home care or nursing home fees if and when needed. Pre-funded premiums can be paid as a lump sum, monthly or annually, and benefit levels and premiums are frequently reviewed.


Due to the fact that policies are long term plans, they don’t require yearly renewal like household and car insurance policies do. However, the contributions being made may not continue to be enough to maintain the benefits, so a review once every five years would be put in place to ensure that adequate cover is maintained.