Activities of Daily Living

Personal care activities that may include bathing, dressing, eating, transferring, toileting, continence, and mobility.

Assisted Living Facility

A residential facility that provides room, board, and 24-hour personal care to individuals with long-term care needs. It is a care option for individuals who are not able to manage at home but do not need the level of skilled care provided in a nursing home. It may also be called a Custodial Care facility.

Automatic Increase Benefit

A policy provision that increases, annually, the policy monthly benefit by either a stated percentage or the latest Consumer Price Index measure, without the evidence of either medical or financial insurability. When included it automatically increases the policy unless the client tells the company to not increase the policy (known as negative election).

Bed Hold Benefit

If your stay in a Nursing Home or Assisted Living Facility is interrupted because you are hospitalized, we will continue to pay benefits to assure a place will be available when you return to the same facility. The duration of benefits available varies; please check your policy coverage for the specific number of days available.

Benefit Amount

How much the client will receive if sick or hurt and unable to work? For individual policies, up to about $100k of income, approximately 60% is the amount most carriers will replace at the time the policy is issued. At higher incomes, the benefit amount goes down proportionately. The current limit without tapping into high limit or excess coverage for professionals and executives is $30k of monthly benefit.

Benefit Amount (Daily/Monthly)

Your Benefit Amount represents the maximum amount of money per day or per month*, as chosen by you, that your policy will provide to cover your long-term care needs.

Benefit Period

The minimum period of time (years) you can expect your coverage to last.

Benefit Period

The benefit period is the amount of time that a policy will pay benefits. Benefit periods available, are 1, 2, 5, and 10 years, to age 65, 67, and 70. The average claim is about 5 years in length, so if a client cannot afford a benefit period to age 65 or longer they should consider a shorter benefit period.

Business Overhead Expense

A policy that reimburses a small business owner during a disability for fixed business expenses that are incurred. The benefit period is usually 12, 18, or 24 months, and is designed to keep the business open while the owner recovers or until the owner is no longer responsible for the business expenses. The owner’s salary is not covered, but many other fixed expenses are, including; rent, utilities, employee’s salaries, professional licenses, property taxes, and interest payments. Benefits of up to $50,000 per month are available with traditional carriers.

Catastrophic Disability Rider (CAT)

This rider pays an additional monthly benefit in the event of a catastrophic disability. A catastrophic disability is defined by most insurance companies as follows: unable to perform without assistance two out of six activities of daily living or suffers from cognitive impairment, the client would qualify for additional monthly benefits. Combined with the base policy you can replace up to 100% of your current income.

Coordination of Benefits

In some instances benefits that are available under your Long-Term Care policy may coordinate with other insurance or government programs such as Medicare and Medicaid. Policies do not cover services, including co-insurance or deductibles when Medicare is covering your long-term care. In some instances your policy may be able to cover services in addition to those paid for by Medicare, for example if you are receiving skilled home health care covered by Medicare you may also be eligible to receive custodial home health care that Medicare is not covering.

Cost of Living Rider (COLA)

This rider adjusts the benefit amount at the end of the first year of claim and each year thereafter by a specific percentage (usually 3, 4, or 6%), and the cap is most often tied to the consumer price index.

Covered Charges

Charges incurred that are covered by your long-term care policy. Typically covered charges include such things as Home Health Care both skilled and custodial, room and board in an Assisted Living Facility or Skilled Nursing Facility.

Custodial care

Non-skilled long-term care services aimed at maintaining your health and/or preventing deterioration in your functional status.

Daily Benefit

The maximum amount your long-term care insurance will pay on any single day.

Date of Service

A day that you are eligible for benefits under your policy, including Dates of Service during the Elimination Period.

Disability Buy-Out

A policy that pays a business or co-owner either a lump-sum or a monthly payment to provide the funds to buy out the business interest of a disabled owner in the event he is no longer able to work as a principal in the business.

Disability Insurance

Disability insurance replaces lost income in the event of injury or illness that prevents a person from being able to earn a living. If a person’s financial lifestyle would be adversely affected by a disability, he or she needs disability insurance. The descriptions here focus on individual policies.

Elimination Period

Is the period of time that must elapse from the start of the disability until benefits are paid. For individual disability policies, the most common elimination period is 90 days. Shorter and longer elimination periods are available, but shorter periods are significantly more expensive and longer periods offer only limited savings.

Elimination Period (Qualification Period)

The Elimination Period on your long-term care insurance policy is like a deductible. Before your LTC policy will begin paying benefits, you must first pay for your own long-term care costs for a certain number of days. In some policies, the Elimination Period is dates of service, and in others, it is calendar days. Please refer to your policy’s definition.

Employer Size

The size of the employer is a factor that can determine if a health plan is fully insured or even if a group health insurance plan is available at all. Many small employers have a fully insured group health insurance plan.

Employer-Paid Limits

The monthly benefit the insured can purchase when the employer is paying the premium. This limit is higher than the ordinary issue limit because of the taxation on benefits when received due to the employer’s deducting the premium paid as an ordinary business expense.

Exclusion Rider

A document, which the insured must sign, indicating a condition(s) which is specifically not going to be covered under this insured’s policy.

Future Purchase Options

(FIO, GIO, Benefit Update or Guaranteed Insurability) This feature, usually added by the rider, allows the client to increase the monthly benefit on specified anniversaries without evidence of medical insurability. Financial underwriting is required with a short-form application to obtain more coverage.

Graded and Step Rate Premiums

Some carriers offer a policy that starts with a low premium, but increases annually or one time, usually at the end of five years. These policies are usually offered to applicants right out of school or just starting a business when income is low, and expenses are high.

Guaranteed Renewable (GR)

Guaranteed renewable means that the carrier can never change or cancel the policy as long as the client keeps paying the premiums, but it does not have a rate guarantee. The insurance company maintains the right to increase the rates on a per-class basis for all insured. An individual policyholder cannot be singled out for a rate increase based on claim or health history, once the policy is in force and premiums are paid on time.

Home Health Aide

A non-medical professional who provides custodial care in your home

Home Health Care

Medical and non-medical professional or personal care services provided in your home. Home Health Care may include occupational, physical, respiratory, or speech therapy, as well as custodial and/or nursing care.

Homemaker services

The non-medical and incidental support services that are necessary for you to be able to remain in your own home: meal preparation; laundry; light housekeeping; and supervising self-administration of medicine.

Hospice care

Care intended to alleviate physical, emotional, or spiritual discomforts near the end of life.

Inspection Report OE Telephone Interview

Information that provides a summary description of the insured’s employment, health history, and habits as a result of a direct interview done by the insurance company during the underwriting process.

Key Person Policy

A product designed to reimburse the business for a financial loss during the key person’s disability until recovery or a suitable replacement can be found. Usually, a lump sum or combination with a monthly payment is available.

Licensed health care practitioner

A physician, a registered nurse (R.N.), a licensed certified social worker (LCSW), or any other individual who meets the requirements as may be prescribed by the Secretary of the Treasury.

Lifetime Maximum Benefit

The total pool of money payable for covered long-term care services received while insured

Long-Term Care (LTC)

Personal care and other related services provided on an extended basis to people who need help with activities of daily living or who need supervision due to severe cognitive impairment. Long-Term Care can be provided at home, in a nursing home, assisted living facility, or an adult daycare center.

Long-Term Care (LTC) insurance

Insurance that helps defray the costs of assistance with the activities of daily living or the costs of supervision due to severe cognitive impairment.


the Minimum Data Set is a federally mandated process for clinical assessment of all residents in Medicare/Medicaid-certified nursing homes. This assessment contains information in a variety of categories including, but not limited to: cognitive patterns, physical functioning, disease diagnoses, and treatments/procedures.

Monthly benefit

The maximum amount your long-term care insurance will pay in any single month.

Non-Cancelable (Non-Can)

The insurance company can never raise rates on these policies. When included, it is more expensive because the rate is guaranteed from the time the policy is purchased until age 65, and it cannot be changed if the client pays the premium on time.

Non-duplication of benefits

Your policy will only pay covered charges in excess of the charges covered under Medicare (including amounts not reimbursable by Medicare such as a Medicare deductible or coinsurance amounts) (this means that your policy will not pay for your Medicare deductibles or coinsurance), other government programs (excluding Medicaid) or any state or federal workers’ compensation, employer’s liability or occupational disease law.

Nursing Care

Skilled or intermediate care provided by one or more of the following health care professionals: registered nurse (R.N.), licensed vocational nurse, licensed practical nurse, physical therapist, occupational therapist, speech therapist, respiratory therapist, medical social worker, or registered dietician.

Nursing home

A licensed facility that provides 24-hour-per-day room and board, nursing care, and personal care services. Nursing homes also provide medical care, therapy, and other health-related services.

Occupational Class

The occupation class is the way a rate is determined based on an applicant’s job duties. (along with health issues, age, and gender). Typically, the more manual labor involved, the lower the occupation class. The best way to determine the appropriate classification is to know what the applicant’s daily work-related duties are. Insurance duties, not job titles.

Period of Care

A Period of Care is the period of your claim and is measured from your first Date of Service and ends when there are 180 consecutive days for which you have not received covered services.

Plan of care

A plan prescribed by a licensed health care practitioner that identifies services that meet your long-term care needs

Policy limit

The total amount from which you will be paid benefits for all covered care and services. All benefits will be deducted from the policy limit.


Many fully insured group health insurance plans are pooled, or grouped, in many states. This means that the employees of one company are grouped with those of another. Pooling employees in fully insured health plans help to spread the risk of claims for medical costs among a larger amount of employees and employers. Small business groups are normally pooled to protect against financial loss that can result when an employee has a major medical claim.


Premiums that are charged for fully insured health insurance plans vary depending on specific factors. These include the size of the employer, the number of employees, and how health care is used by covered individuals. The amount of premium paid by an employer can change from year to year if the number of employees changes. Employers, however, do not pay a different premium for each employee, which keeps the costs consistent.

Presumptive Total Disability

A policy provision that waives the total disability eligibility requirement if a loss is suffered due to loss of sight, hearing, speech, or use of two limbs.

Reducing Costs

Rates for fully insured health insurance plans are affected by various factors. One factor that can affect the insurance rate is when an employer promotes health and wellness for employees. This includes promoting a healthy lifestyle, exercising, keeping a healthy body weight, and avoiding the use of tobacco and alcohol. The belief is that employees who maintain a healthy lifestyle have fewer health-related claims.

Residual Rider

It allows the insured to collect a benefit if unable to work full time or do all duties necessary for his occupation, which causes him to suffer an income loss. The amount of benefit paid is proportional to the loss of income The definition usually reads something like: “Due to injury or sickness the insured is unable to perform one or more of the substantial or material duties of their occupation, is working and is suffering a loss of income of at least 20%.” Residual is one of the most important features of a disability policy since many claims do not begin or end as a total disability.

Respite Care

Short-term care designed to provide temporary relief to your primary caregiver. Respite care may be provided in a Skilled Nursing Facility, Assisted Living Facility, Adult Day Care, or your home.

Restoration of Benefits

When you are no longer eligible for benefits for 180 consecutive days or more, and if you have not exhausted available benefits, we will restore the full Policy Limit.

Retirement Protection Insurance

Provides benefits to fund a 401k or qualified retirement plan. Coverage can be in addition to individual DI and is not affected by disability issues and participation limits.

Return of Premium

This optional benefit provides a refund of a specified percentage of policy premium at specified dates less any claims that have been paid during the specified time.


When an employer pays the premium for a group health insurance plan, the insurance company is then responsible for paying any medical costs from eligible claims. Claims are paid based on the type of coverage and benefits that are provided by the policy. Out-of-pocket costs, such as the deductible or co-payment, will need to be paid by a covered employee. Employers are only responsible for paying the premiums for the health insurance policy.

Skilled nursing care

Nursing care that is performed by skilled medical personnel. It can be either in a facility setting or at home. (Note: Medicare and Medicaid have their definitions of “skilled nursing care” which do not necessarily match those in long-term, care insurance policies.)

Skilled nursing facility

Generally a state-licensed institutional setting that provides skilled care by skilled medical personnel. This care is available 24 hours a day and is ordered by a physician under a treatment plan.

Social Security Offset Rider

An optional benefit that coordinates the policy benefits with any benefits received through Social Security disability (and, often, other public programs) to avoid being overinsured.

Stay at Home Benefit

Additional funds available that can be used to pay for a variety of long-term care expenses while you are living in your home that are not otherwise covered under the policy.
  • Home modifications
  • Emergency medical response systems
  • Durable medical equipment
  • Caregiver training
  • Provider care checks
  • Home safety checks

Substitute Salary Expense

An optional benefit available under the Business Overhead Expense policy reimburses the insured for expenses incurred in paying a replacement for the disabled owner during the insured’s disability.

Waiver of premium

A provision on your policy detailing when premiums are no longer payable because of your claim status. The trigger for this benefit varies by policy. You must continue to pay premiums until you have received confirmation that your policy is in a Waiver of Premium status. If your claim closed for any reason, premium payments would resume.

Reference: John Hancock Insurance. Long Term Care Glossary Terms.