Options for Paying Your Long Term Care Insurance Policy Premium

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Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

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UPDATED: Jun 19, 2018

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Once you decide to buy a long term care insurance policy, you may be able to pay your policy
premiums one of two ways. One is called the continuous payment option. The other is the
limited payment option.

Under the continuous payment option you pay your premiums just as you would with any
other insurance policy, typically on a monthly, quarterly, semi-annual or annual basis. When you
begin receiving long term care benefits, you no longer are required to continue paying your
premiums. If you stop receiving benefits, though, you are required to restart paying your
premiums as you were before you began receiving benefits. Your policy can only be canceled if you
fail to pay your premiums when they are due. However, the insurance company can increase premiums
as long as it is done for an entire class of policies. The continuous payment option is
usually less expensive than the limited payment option and is by far the most common
payment option.

In addition to the continuous payment option, you may be able to pay under what is
called a limited payment option. Under this option you pay your premiums for a limited
period of time, but once your planned premium payments are complete, you are not required to pay
additional premiums for any reason. You can make limited payments one of three ways:

  • Single Pay. With this plan you make one single lump sum premium payment and never
    have to make another payment.
  • Ten-Pay or Twenty-Pay. Under this plan you complete the payment of your premiums in
    either ten years or twenty years, depending on which option you choose. You can elect to make
    your payments on a monthly, quarterly, semi-annual or annual basis. A person might choose this
    option if they expect their income to be significantly lower in ten or twenty years.
  • Pay to Sixty-Five. Under this plan you pay premiums until you are 65 years old. Here
    again you can pay on a monthly, quarterly, semi-annual or annual basis. Like the Ten-Pay or
    Twenty-Pay plans, this plan might be attractive if you anticipate that your income will decline at
    age 65.

After you make your last payment under any of the limited payment options, neither you
nor the insurance company can cancel the policy. And. of course, once your payment plan has been
completed, you are not subject to any premium increase by class. You are, however, subject to a
possible premium increase by class while you are still paying premiums under your limited
payment option
unless your policy fixes your premium for the pay period.

Policies with the limited payment option are more expensive than continuous payment
policies. The insurance company must set your premium at a higher rate because it anticipates that
it will not be receiving premium for as long a period of time as it would if you were paying
premium for your lifetime under the continuous payment option.

Even though this type of policy is more expensive, the guaranteed fixed premium payment (if
you have it
) and the idea of having all premiums paid by a certain time make the limited
payment option
attractive to some people.

These payment options may not be offered by all companies and they may not be available in all
states. If interested in a particular option, you should check with the insurance company.

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