Accelerated Death Benefit – A feature of a life insurance policy that lets you use some of the policy’s death benefit prior to death.
Activities of Daily Living (ADLs) – Everyday functions and activities individuals usually do without help. ADL functions include bathing, continence, dressing, eating, toileting and transferring. Many policies use the inability to do a certain number of ADLs (such as two of six) to decide when to pay benefits.
Adult Day Care – Care provided during the day at a community-based center for adults who need assistance or supervision during the day, including help with personal care, but who do not need round-the-clock care.
Alzheimer’s Disease – A progressive, degenerative form of dementia that causes severe intellectual deterioration.
Assisted Living Facility – A residential living arrangement that provides individualized personal care and health services for people who require assistance with activities of daily living. The types and sizes of facilities vary; they can range from a small home to a large apartment-style complex. They also vary in the levels of care and services that can be provided. Assisted living facilities offer a way to keep a relatively independent lifestyle for people who don’t need the level of care provided by nursing homes.
Bathing – Washing oneself by sponge bath, in either a tub or shower. This activity includes the task of getting into or out of the tub or shower.
Benefit Triggers (Triggers) – Term used by insurance companies to describe the criteria and methods they use to determine when you are eligible to receive benefits.
Benefits – Monetary sum paid or payable to a recipient for which the insurance company has received the premiums.
Care Management Services – A service in which a professional, typically a nurse or social worker, may arrange, monitor or coordinate long-term care services (also referred to as care coordination services).
Cash Surrender Value – The amount of money you may be entitled to receive from the insurance company when you terminate a life insurance or annuity policy. The amount of cash value will be determined as stated in the policy.
Chronic Illness – An illness with one or more of the following characteristics: permanency, residual disability, requires rehabilitation training, or requires a long period of supervision, observation or care.
Chronically Ill – A term used in a tax-qualified long-term care contract to describe a person who needs long-term care either because of an inability to do everyday activities of daily living (ADLs) without help or because of a severe cognitive impairment.
Cognitive Impairment – A deficiency in a person’s short- or long-term memory; orientation as to person, place and time; deductive or abstract reasoning; or judgment as it relates to safety awareness.
Community-Based Services – Services designed to help older people stay independent and in their own homes.
Continence – The ability to maintain control of bowel and bladder function; or when unable to maintain control of these functions, the ability to perform associated personal hygiene (including caring for catheter or colostomy bag).
Continuing Care Retirement Communities (CCRC) – A retirement complex that offers a broad range of services and levels of care.
Continuous Payment Option – A premium payment option that requires you to pay premiums until you trigger your benefits. Premiums are usually paid on a monthly, quarterly, semi-annual or annual basis. The policy is not cancelable except when premiums aren’t paid; however, the insurance company can increase premiums on an entire class of policies. Premiums are usually the lowest available.
Custodial Care (Personal Care) – Care to help individuals meet personal needs such as bathing, dressing and eating. Someone without professional training may provide care.
Daily Benefit – The amount of insurance benefit in dollars a person chooses to buy for long-term care expenses.
Dementia – Deterioration of intellectual faculties due to a disorder of the brain.
Disability Method – Method of paying benefits that only requires you to meet the benefit eligibility criteria. Once you do, you receive your full daily benefit.
Dressing – Putting on and taking off all items of clothing and any necessary braces, fasteners or artificial limbs.
Eating – Feeding oneself by getting food into the body from a receptacle (such as a plate, cup or table) or by a feeding tube or intravenously.
Elimination Period – A type of deductible; the length of time the individual must pay for covered services before the insurance company will begin to make payments. The longer the elimination period in a policy, the lower the premium. Sometimes also called a “waiting period.”
Expense-Incurred Method – Method of paying benefits where the insurance company must decide if you are eligible for benefits and if your claim is for eligible services. Your policy or certificate will pay benefits only when you receive eligible services. Once you have incurred an expense for an eligible service, benefits are paid either to you or your provider. The coverage will pay for the lesser of the expense you incurred or the dollar limit of your policy. Most policies bought today pay benefits using the expense-incurred method.
Extended Term Benefits – Full benefits for a reduced time period, applicable for use during a certain period of time. If not used in a set number of years after the lapse, then you lose it. Once the period has expired, the contract terminates.
Guaranteed Renewable – When a policy cannot be cancelled by an insurance company and must be renewed when it expires unless benefits have been exhausted. The company cannot change the coverage or refuse to renew the coverage for other than nonpayment of premiums (including health conditions and/or marital or employment status). In a guaranteed renewable policy, the insurance company may increase premiums, but only on an entire class of policies, not just on your policy.
Hands-On Assistance – Physical assistance (minimal, moderate or maximal) without which the individual would not be able to perform the activities of daily living.
Health Insurance Portability and Accountability Act (HIPAA) – Federal health insurance legislation passed in 1996 that allows, under specified conditions, long term care insurance policies to be qualified for certain tax benefits.
Home Health Care – Services for nursing care or occupational, physical, respiratory or speech therapy. Also included are medical, social worker, home health aide, and homemaker services.
Homemaker Services – Household services done by someone other than yourself because you’re unable to do them.
Home for the Aged – A general term for a facility that cares for elderly people. It is often not covered under a long-term care policy.
Hospice Care – Continuous care provided at home or in a facility with a home-like setting for a terminally ill person. A terminally ill person has a life expectancy of six months or less.
Indemnity Method – Method of paying benefits where the benefit is a set dollar amount and is not based on the specific service received or on the expenses incurred. The insurance company only needs to decide if you are eligible for benefits. Once the company determines you are eligible and you are receiving eligible long-term care services, the insurance company will pay that set amount directly to you up to the limit of the policy.
Inflation Protection – A policy option that provides for increases in benefit levels to help pay for expected increases in the costs of long-term care services.
Lapse – Termination of a policy when a renewal premium is not paid.
Limited Payment Option – A premium payment option in which the person pays premiums for a set time period. After the last premium payment, neither the company nor the person can cancel the policy. These plans are more expensive than continuous payment policies; however, their guaranteed fixed payment and no-cancel features make them attractive to some people.
Medicaid – A joint federal/state program that pays for health care services for those with low incomes or very high medical bills relative to income and assets.
Medicare – The federal program providing hospital and medical insurance to people aged 65 or older and to certain ill or disabled persons. Benefits for nursing home and home health services are limited.
Medicare Supplement Insurance – A private insurance policy that covers many of the gaps in Medicare coverage (also called Medigap insurance coverage).
National Association of Insurance Commissioners (NAIC) – Membership organization of state insurance commissioners. One of its goals is to promote uniformity of state regulation and legislation related to insurance.
Noncancelable Policies – Insurance contracts that cannot be cancelled by the insurance company and the rates cannot be changed by the insurance company.
Nonforfeiture Benefits – A policy feature that returns at least part of the premiums to you if you cancel your policy or let it lapse.
Nursing Home – A licensed facility that provides general nursing care to those who are chronically ill or unable to take care of daily living needs. May also be referred to as a Long-Term Care Facility.
Paid-up Policy – When you prematurely stop paying your premiums, your insurance policy is deemed to be paid-in-full. You do not pay any more premiums, but the benefits you receive under this policy will be determined based on the amount of premiums you have already paid, not on the level of benefits that you originally purchased.
Partnership Policy – A type of policy that allows you to protect (keep) some of your assets if you apply for Medicaid after using your policy’s benefits. Not all states have these policies.
Personal Care (Custodial care) – Care to help individuals meet personal needs such as bathing, dressing and eating. Someone without professional training may provide care.
Personal Care Home – A general term for a facility that cares for elderly people. It is often not covered under a long-term care policy.
Pre-existing Condition – Illnesses or disability for which you were treated or advised within a time period before applying for a life or health insurance policy.
Reduced Paid-up Benefits – A nonforfeiture option that reduces your daily benefit but retains the full benefit period on your policy until death. For example, you buy a policy for three years of coverage with a $150 daily benefit. Then if you let the policy lapse, the daily benefit will be reduced to $100. The exact amount of the reduction depends upon how much premium you have paid on the policy. The benefit period on your policy continues to be three years. Unlike extended term benefits, which must be used in a certain amount of time after the lapse, you can use reduced paid-up benefits at any time after you lapse (until death).
Rescind – When the insurance company voids (cancels) a policy.
Respite Care – Care provided by a third party that relieves family caregivers for a few hours to several days and gives them an occasional break from daily caregiving responsibilities.
Rest Home – A general term for a facility that cares for elderly people. It is often not covered under a long-term care policy.
Rider – Addition to an insurance policy that changes the provisions of the policy.
Shortened Benefit Period – A nonforfeiture option that reduces the benefit period but retains the full daily maximums applicable until death. The period of time for which benefits are paid will be shorter. For example, you buy a policy for three years of coverage with a $150 daily benefit, but if you let the policy lapse, the benefit period is reduced to one year, with full daily benefits paid. The exact amount of the reduction depends upon how much premium you have paid on the policy. Unlike extended term benefits, which must be used in a certain amount of time after the lapse, you can use shortened benefits at any time after you let the premium lapse (until death).
Skilled Care – Daily nursing and rehabilitative care that can be performed only by, or under the supervision of, skilled medical personnel. This care is usually needed 24 hours a day, must be ordered by a physician, and must follow a plan of care. Individuals usually get skilled care in a nursing home but may also receive it in other places.
Spend Down – A requirement that an individual use up most of his or her income and assets to meet Medicaid eligibility requirements.
Stand-by Assistance – Caregiver stays close to the individual to watch over the individual and to provide physical assistance if necessary.
State Health Insurance Program – Federally funded program to train volunteers to provide counseling on the insurance needs of senior citizens. See pages 54-62 for a list of State Health Insurance Programs.
Substantial Assistance – Hands-on or stand-by help required to do ADLs.
Substantial Supervision – The presence of a person directing and watching over another who has a cognitive impairment.
Tax-Qualified long term care insurance Policy – A policy that conforms to certain standards in federal law and offers certain federal tax advantages.
Term Life Insurance – Covers a person for a period of one or more years. It pays a death benefit only if you die during that term. It generally does not build a cash value.
Third Party Notice – A benefit that lets you name someone whom the insurance company would notify if your coverage is about to end because the premium hasn’t been paid. This can be a relative, friend or professional such as a lawyer or accountant.
Toileting – Getting to and from the toilet, getting on and off the toilet and performing associated personal hygiene.
Transferring – Moving into and out of a bed, chair or wheelchair.
Triggers (Benefit Triggers) – Term used by insurance companies to describe when to pay benefits.
Underwriting – The process of examining, accepting or rejecting insurance risks, and classifying those selected, to charge the proper premium for each.
Universal Life Insurance – A kind of flexible policy that lets you vary your premium payments and adjust the face amount of your coverage.
Waiver of Premium – A provision in an insurance policy that relieves the insured of paying the premiums while receiving benefits.
Whole Life Insurance – Policies that build cash value and cover a person for as long as he or she lives if premiums continue to be paid.