Activities of Daily Living (ADLs): ADLs consist of the everyday functions one typically can do without assistance. The ADLs include bathing, dressing, eating, toileting, continence, and transferring. Most LTC policies require that the insured be unable to independently complete two of the six ADLs to qualify for benefits.

Adult Day Care: Benefits provided by LTC policies that give care to adults at senior or community centers.

Alternate Care Facility: A care facility that provides personal assistance on a 24 hour basis, but differs from a nursing facility as it does not provide skilled nursing services.

Alternate Plan of Care: As specified in the policy, this benefit allows flexibility in how the insured receives the benefits of the LTC policy. For example this feature may allow one to continue to receive care in home when facility care is recommended. The benefits of the alternate plan of care would pay for cost associated with medical equipment, home-modifications, visiting nurses, etc. to remain in one’s home.

Annual Statement: Document provided by the insurance company to the policy owner every year detailing a policy’s performance. Figures reported may include: account values, premiums paid, etc. It is important to review your Annual Statement when it is received.

Application: A written paper or electronic provided by an insurance company that is completed by the insurer’s agent, the insured, and in many cases also by the medical examiner. The completed application provides information about the health, occupation, lifestyle, and family history of the proposed insured. The policy application is signed by the policyowner, insured, and insurance agent. The completed and signed application is used by the insurance company to decide if a policy should be issued and at what price/cost.

Assisted Daily Living Facility: A facility that provides basic accommodation and limited personal care with the ability to respond to medical needs as they arise.

Assisted Living/Residential Care Facility: Residential based care is usually provided in an apartment or condominium and gives the insured personalized care and assistance with the ADLs. In the state of California this form of care is referred to as Residential Care Facility.

Attained Age: The age of the insured the insurance company uses to calculate the required premiums for a policy.


Bank Draft: A premium payment method by which a policy owner allows his/her bank to withdraw a designated premium amount from his/her specified account on a periodic basis and transfer the money to the insurance company to be applied as payment for the policy premium. Also known as an Electronic Funds Transfer (EFT).

Bed Reservation: A benefit in most LTC policies that pays the cost of reserving your bed if you are hospitalized during a covered stay in a care facility.

Benefit Period: The maximum length of time specified in a LTC policy that the insurer will pay benefits for the cost of the LTC received.

Benefit Triggers: Benefit triggers refer to the qualifications that need to be met in order for the insured to receive benefits in a LTC policy. Typically the insured qualifies for the benefits if suffering from a severe cognitive impairment or the inability to independently complete two out of the six Activities of Daily Living (ADLs).

Broker: An individual or company who acts as an intermediary between the insurance buyer and the insurance company. Brokers by nature, generally represent many different insurance companies and sell many insurance products. A broker’s typical role is to research the market in order to find the best possible options for the insured.


Calendar Day Elimination Period: An elimination period available in some policies that defines the elimination period as a set amount of calendar days from the first day the insured incurs expenses for covered services. The advantage of a Calendar Day Elimination Period is that the insured only has to meet the benefit eligibility requirements and does not have to incur expenses during the elimination period, except for the on the first day that starts the elimination period.

Care Coordination: A service provided by many LTC policies that provides assistance in arranging, monitoring, and coordinating long term care services for the insured. The service is performed by a professional such as a social worker or nurse typically referred to as a “Care Coordinator”, and who is not an employee of the insurance carrier. In some states the inclusion of Care Coordination is mandatory in a LTC policy. The use and cost of Care Coordination does not reduce the maximum benefits stated in a LTC policy.

Caregiver Training: An additional benefit included in some LTC policies that provides training to an informal caregiver to enable them to qualify as an in-home caregiver.

Chronic Illness: An illness defined by one of the following characteristics: residual disability, permanency, requires rehabilitation training, or requires a long period of care, observation, or supervision.

Cognitive Impairment: A severe deficiency in a person’s short or long-term memory, orientation, reasoning, or judgment as it relates to the individual’s safety.

Community Based Care Setting: Services provided in a central location within a community. The services provided typically include assistance with meals, homemaking, transportation, and may also included professional nursing and therapy services.

Consumer Price Index: An index used to measure inflation by tracking the price of basic goods and services over time. Some LTC polices will provide a provision that will increase the maximum benefit amounts provided in accordance with the increase in the Consumer Price Index.

Contingent Nonforfeiture Benefit: A benefit automatically included in a LTC policy that allows you to reduce your coverage if your policy should lapse due to a substantial premium increase. The benefit would provide you the ability to maintain you current premium costs by reducing your coverage amounts or benefit period.

Cost of Living Rider: A rider that automatically increases the maximum benefits every year to keep the benefits amounts relevant to the increased cost of long-term care service.

Covered Services: The specified services for which benefits will be provided in a LTC policy. The services covered range from nursing facility care, home health care, assisted living/residential facility care, adult day care, hospice care, respite care, care advisory service, caregiver training and supportive equipment.

Critical Illness Rider: An additional form of insurance coverage that can be added as a Rider to certain types insurance policy which has a specified benefit to the policyowner if the insured is diagnosed with a critical illness or condition.

Custodial Care (Personal Care): A basic form of long-term care provided to meet the basic needs of bathing, eating, and dressing. Custodial Care is typically provided by someone without professional training.


Daily Benefit: The maximum stated dollar amount the insurance carrier will pay the policy owner for the cost of covered long term care services.

Date of Issue: The date on which a policy or contract is issued by the insurance carrier. Note, this may be different from the policy “Effective Date”.

Dementia: A brain disorder that causes a deterioration of one’s mental and intellectual faculties.

Dual Waiver of Premium: A provision included in some LTC policies in which both spouses are insured; that waives the premium requirements for both spouses’ policies should one spouse begin receiving benefits.


Electronic Funds Transfer: A premium payment method by which a policy owner allows the insurance company to withdraw designated premiums directly from his/her bank account at a specified amount on a periodic basis and to transfer the money to the insurance company to be applied as payment for the policy premium. Also known as a Bank Draft.

Elimination Period (Waiting Period or Deductible): The length of time an insured must pay for LTC services out-of-pocket before the insurer will begin to pay the insured benefits. The most common elimination period is 90 days and usually needs to be satisfied only once in the policy’s lifetime.

Evidence of Insurability: Proof of a person’s physical health condition, life style, occupation, or other factors, utilized by an insurance company to determine the acceptability of an applicant’s risk profile.


Free-Look Provision: Most state Departments of Insurance require a provision in a life, annuity, long-term care, or disability policy that gives the policyowner or contract owner a specified amount of time to review a new policy or contract after issuance and receipt. This is a consumer friendly feature allowing the policy or contract to be returned to the insurance company and voided within the specified time limit for a refund of all premiums paid. A common specified Free Look Period is 60 days.


Grace Period: A period of time stated in an insurance policy in which the policy will stay inforce in the event the required premium payment has not been made and there is not sufficient policy cash values. A common length of a Grace Period is 30 days.

Guaranteed Insurability Option: A rider to a life insurance policy that guarantees the right to purchase additional life insurance or long-term care coverage at set option dates without evidence of insurability.

Guaranteed Renewable: A Guaranteed Renewable LTC policy means that the insurer cannot change or cancel your policy as longs as you make timely premium payments. This does not however guarantee your premium rates will remain level, premiums may be adjusted by an insurer on a class basis only.

Health Insurance Portability and Accountability Act (HIPAA): Federal health insurance legislation passed in 1996 that set guidelines for the first time regarding the tax status of long-term care insurance.

Home Health Care: A form of care that provides medical and nonmedical services to individuals in their home. These services could include homemaker services, respite care, personal care, assistance with the activities of daily living, and case management services.

Homemaker Services: Services covered in a LTC policy including cleaning, cooking, and shopping done by a caregiver because the insured is unable to complete the tasks.

Hospice Care Benefit: This is a LTC policy benefit providing care services and support to a terminally ill insured.


Impaired Risk: Refers to an individual which the insurance company has assessed to be a substandard or impaired risk. Factors such as health history, life style, and family history can result in an individual being classified as an “Impaired Risk”. Being an impaired risk will result in higher premium requirements.

Indemnity Policy: A LTC policy that’s pays benefits on a fixed scheduled amount for each day the insured is receiving care, rather than on a typical expense-reimbursement basis. This benefit amount is paid regardless of the actual expense incurred by the insured.

Independent Agent: An authorized representative of an insurance company who solicits and services insurance contracts. An Independent Agent is not an employee of the insurance company and typically represents many carriers.

Inflation Protection: This is an optional but important rider designed to protect the policy’s benefits against the inflationary costs of long-term care. This rider would increase the total benefits of the policy every year by a stated percentage every year, typically 3% or 5%. While the rider provides larger benefit amounts it also requires larger premiums than policies that do not include an inflation protection rider.

Intermediate Nursing Care: Intermediate Nursing Care is more generic form of care providing daily assistance that is supervised by registered nurses. This care is less skilled than nursing care and is typically comprised of personal care services.


Lapse: The termination or cancellation of an insurance policy due to nonpayment of required premiums. Or, in the case of Variable Life and Universal Life insurance policies, the depletion of cash values below the amount needed to keep the policy in force. Under certain conditions, a policy might stay inforce under a “settlement option”.

Licensed Health Care Practitioner: A medical professional who has satisfied the requirements set out by the Secretary of Treasury. This can be a physician, registered nurse, or licensed social worker.

Life Expectancy: The average number of years a person is expected to live. Life expectancy will vary based on age, sex, health, and family history.


Medical Information Bureau (MIB): An independent entity that collects and stores medical data on life, health and other insurance applicants. The information is exchanged among participating insurance companies, this information may only be accessed with written authorization from the insured. Its function is to safeguard against fraud and concealment by allowing insurance companies to discover relevant, undisclosed, health facts.

Medicare: A federally sponsored program that provides hospital and medical insurance to individuals age 65 and older and to certain disabled and ill individuals. Any benefits for long-term care related services are minimal and very limited.

Medicare Supplement Insurance: A small insurance policy sold by private carriers to supplement the lack of coverage provided by Medicare.

Monthly Anniversary: The same day as the policy date for each succeeding month (i.e. the 15th of every month).


National Association of Insurance Commissioners (NAIC): A membership organization of the appropriate state insurance commissioners. Its goals are to promote the uniformity of state regulation and legislation related to insurance and to ensure insurance sales best practices.

Non-Cancellable: A type of insurance policy in which the insurance carrier must renew your coverage as long as you pay your premiums in a timely manner. A non-cancellable insurance policy also states that if the premium requirements are met the insurance carrier may not increase the cost of the policy at any time.

Non-forfeiture Benefits: This is a provision included in all LTC policies, unless a contingent non-forfeiture benefit is selected, that allows you to keep your policy in force with reduced benefits should you discontinue premium payments after the third year of the policy.


Optional Full Refund of Premium Benefit Rider: A rider available at an additional premium that provides your beneficiaries with a return of all your premiums paid upon you death with no deductions for the benefits already paid to you.

Owner (Policy Owner): The stated individual or entity who owns a life, annuity, long-term care, or disability insurance policy. The owner could be the insured on the policy, the beneficiary, or another third party. Normally, the policy owner pays the premiums on the policy and is the only one who is allowed to make changes to a policy, such as: a change of beneficiary, withdraw cash values, or taking loans on the policy.


Payment Modes: The designated schedule of premium payments selected by the policy owner. The premium modes available are monthly, quarterly, semi-annual and annual. Annual premiums are discounted versus monthly premiums, which are generally 6-8% higher per year.

Payor: The individual or entity who is making premium payments on a policy or contract. If the payor is not the owner, the payor may not be entitled to the rights and provisions of the policy or contract.

Personal Care Advisor: An employee of the insurance company who helps you coordinate your plan of care. This service is typically free to policy owners and is similar to that of a Care Coordinator.

Planned Periodic Premium or Payment: The premium billing frequency and amount of premium to be paid at specific intervals until the policy’s maturity date.

Policy / Contract: The written agreement between the insurance company and the policy owner or contract owner. The contract will state coverage amount, premium amount, length of coverage, beneficiaries, and additional information pertinent to your contract.

Policy Anniversary: The annual anniversary of the policy issue date.

Policy Date: The date on which coverage or a contract becomes effective. This is shown on the policy or contract specification page

Policy Number / Contract Number: A unique alpha numeric code assigned to the policy by the insurance company for identification and tracking purposes.

Policy Owner / Contract Owner: The stated individual or entity who owns the insurance policy. The owner could be the insured on the policy, the beneficiary, or another third party. Normally, the policy owner pays the premiums on the policy and is the only one who is allowed to make changes to a policy, such as: a change of beneficiary, withdraw of cash values, or taking loans on the policy.

Policy Status: The current status of the policy (Paid, Inforce, In Grace (premiums are late), Lapsed/Cancelled).

Portability: Portability is a term used to describe your ability to receive your LTC benefits anywhere in the U.S.

Premium: Payments made to the insurance company to purchase a an insurance policy and to keep the policy in force/active.

Premium Mode: The frequency with which premium payments are made. This is determined by the policy owner. The Premium Mode options are: Annual, Semi-Annual, Quarterly, Monthly or Single Pay.

Quick-Pay (Limited Pay) Options: This refers to the ability to pay all necessary premiums for the life of the policy in a short period of time from when the policy is issued. Limited pay schedules provide options to pay in 5 years, 7 years, 10 years, to-age 65 or even in a one-time lump sum payment option. The Limited Pay options are offered by very few carriers in today’s market.


Rate Classes: Rate classes in combination with age dictate the premiums charged to an applicant. An applicant who is said to be “Rated” will have to pay a higher premium than a Preferred or Standard applicant of the same age.

Rated: A rated policy is issued with a higher premium because the insurance company has assessed the insured to be a substandard or impaired risk.

Refund of Premium on Death: An option offered at an additional premium that provides the policy owner’s beneficiary a refund of premiums less any claims at the death of the insured. This rider differs from the Full Return of Premium Rider, as it takes into consideration any benefits already received.

Reinstatement of Lapsed Policy: A provision that allows the policy owner to reinstate a lapsed policy due to lack of premium payments within 12 months of the policy lapsing. This requires a repayment of all missed premiums as well as proof of good health. Proof of good health is not needed if the policy owner or insured stopped making premium payments because of a cognitive impairment or loss of functional capacity.

Reinstatement Provision: A policy feature which allows a policyowner to reinstate a lapsed policy within a specified time after lapse. There are usually conditions which must be met to qualify for reinstatement which may include: evidence of insurability and or payment of back due premiums. This right is typically forfeited if a policy has been surrendered for its cash surrender value.

Respite Care: A benefit that provides services to relieve family members of the insured or the caregivers for a period of time ranging from a few hours to several days.

Restoration of Benefits: A provision that enables you to restore the maximum policy benefit if you are not eligible for benefits for a continuous period of time, typically 180 days.

Rider: An additional or optional benefit or provision to an insurance policy.


Single Premium Policies: A policy that is paid in a one-time lump sum premium. This premium is typically non-refundable and the policy is non-cancellable by the insurer.

Skilled Nursing Care: Services provided and supervised by a skilled medical professional, generally a nurse or professional therapist. This care is ordered by a physician and can be provided in a one’s home or in a nursing care facility.

Spend Down: A Medicaid requirement that states that in order to qualify to receive Medicaid benefits you must first have used all or most of your available income and assets.

State Health Insurance Assistance Program: A government paid training program that provides training for volunteers so that they may properly counsel senior citizens on insurance needs.

State Variations: Long-term care insurance guidelines and regulations will vary from state to state. Some products and features available in one state may not be approved in another.

Substantial Assistance: Substantial Assistance refers to the need for actual physical assistance with the activities of daily living,

Substantial Supervision: Substantial Supervision refers to guidance and instruction that ensures your well being and your ability to complete the activities of daily living.

Survivorship Option (Surviving Spouse Premium Waiver): A benefit available at an additional premium that allows couples who applied for their LTC policies together to no longer pay premiums after the death of the first spouse.


Tax-Qualified Long-Term Care Insurance Policy: A policy that has obtained beneficial tax advantages by meeting certain federal tax regulations.

Third-Party Notice: An optional benefit that allows you to name someone on your policy who the insurance carrier can notify if your policy is going to lapse due to a lack of premium.


Underwriting: The process of reviewing and examining an insurance application. It is in underwriting that an application will be accepted, denied, or rated.

Underwriting Class / Rating: The classification of an insured’s risk profile as determined by the insurance carrier when a policy is issued. A favorable underwriting will result in lower premiums. Factors effecting underwriting class include: health, lifestyle, and family history


Waiver of Monthly Deduction: An optional feature for a life insurance policy which waives the monthly cost of insurance charges on a universal life or variable life policy for the duration of a qualified disability as specified in the policy.

Waiver of Premium: A provision that allows the policy owner to discontinue premium payments while receiving benefits under the policy.