The Advantages of Cash Indemnity Benefits in Long Term Care Insurance Policies

Introduction

Long term care (LTC) insurance is a crucial element of financial planning, especially as we age and the likelihood of needing care increases. With various LTC insurance options available, it’s essential to understand the unique features of each policy to make an informed decision. One notable feature found in some policies is cash indemnity benefits. In this article, we’ll discuss what cash indemnity benefits are and why they can be a valuable addition to your LTC insurance policy.

What Are Cash Indemnity Benefits?

Traditional LTC insurance policies typically provide reimbursement for actual expenses incurred for qualified long-term care services. In contrast, cash indemnity benefits pay out a predetermined, fixed cash amount each month once the policyholder becomes eligible for long term care. This cash benefit is paid directly to the policyholder, regardless of the actual cost of care, and without the need to submit receipts or itemized bills.

Why Cash Indemnity Benefits Are Useful

1. Flexibility

One of the most significant advantages of cash indemnity benefits is the flexibility they provide. With traditional reimbursement policies, insurance companies often have a predetermined list of approved care providers and services. However, cash indemnity benefits allow policyholders to use the funds however they see fit, including paying for informal care provided by family members or friends.

2. Simplified Claims Process

Submitting claims under a traditional LTC policy can be a complicated and time-consuming process, requiring the policyholder to gather and submit detailed documentation of their care expenses. With cash indemnity benefits, there’s no need to submit receipts or itemized bills, simplifying the claims process and ensuring faster access to funds when needed.

3. Control Over Care Decisions

Cash indemnity benefits empower policyholders to make their care decisions without being restricted by an insurance company’s limitations. They can choose the care providers they trust, experiment with different care options, and make adjustments to their care plans as needed, without worrying about whether their insurance will cover the costs.

4. Financial Support for Informal Caregivers

Many families opt for informal care provided by family members or friends to ensure their loved ones receive personalized, attentive care. Cash indemnity benefits can be a financial support system for these informal caregivers, compensating them for their time and effort, and helping cover any additional care-related expenses.

5. Potential for Unused Funds

If the cash benefit received exceeds the actual cost of care in a given month, policyholders can use the unused funds for other purposes, such as supplementing their income or saving for future care needs.

What Companies Sell Cash Indemnity Plans

Cash indemnity benefits are available through several reputable insurance providers, including Securian, Nationwide, and Brighthouse, offering policyholders flexibility and control over their long-term care expenses.  We provide a free comparison of all these plans, and many more.

In 2023, the best overall value tends to be Securian, a subsidiary of Minnesota Life Insurance Company, which has been providing insurance solutions since 1880. With a strong financial rating and a commitment to customer satisfaction, Securian offers SecureCare Universal Life, a policy that combines long term care and life insurance, featuring full cash indemnity benefits.

Nationwide, founded in 1926, is a well-known insurance provider with a solid financial standing. Their CareMatters II policy is a hybrid long term care insurance solution that combines life insurance with long-term care coverage. With Nationwide’s cash indemnity benefits, policyholders receive their monthly LTC benefits in cash, offering flexibility in choosing care providers.

Brighthouse Financial, a spin-off from MetLife, has quickly established itself as a reliable provider of insurance and annuity solutions. Brighthouse’s SmartCare policy is a hybrid long term care insurance product that provides partial cash indemnity benefits. This feature allows policyholders to have more control over their care expenses while still benefiting from a simplified claims process.

The Brighthouse policy is considered the best option for those looking for International Benefits (outside of the United States) and they specify in their illustrations that you can use benefits overseas if “prescribed by a Physician licensed in the United States.”

These three companies—Securian, Nationwide, and Brighthouse—demonstrate a commitment to offering policyholders comprehensive long term care insurance options with the added advantage of cash indemnity benefits. By providing flexibility in managing care expenses and simplifying the claims process, these companies are well-positioned to address the diverse needs of their clients.

Partial cash indemnity benefits are available from Lincoln Financial.

Conclusion

Cash indemnity benefits in LTC insurance policies offer a level of flexibility, control, and simplicity that traditional reimbursement policies may not provide. They allow policyholders to make decisions about their care without being restricted by insurance company limitations, while also simplifying the claims process. When shopping for long term care insurance, consider discussing the advantages of cash indemnity benefits with a financial advisor or insurance agent to determine if this feature aligns with your care preferences and financial goals.