What's an indemnity benefit?

Q: Some of the long-term care insurance policies I am researching allow for an indemnity benefit. Can you explain what that means and what advantages it may provide?

A: Most long-term care insurance policies are designed as reimbursement only, meaning that upon submitting all of your receipts for long-term care expenses, the policy will reimburse you up to your policy's limits. Unfortunately, you may have ancillary expenses associated with your long-term care, such as adding ramps or expanding doorways. You may also want complete control over how you want to spend your long-term care benefit, regardless of your actual expenses. That flexibility is not permitted with a reimbursement-only policy.

With a full-indemnity policy, you're paid a monthly benefit regardless of your actual expenses once you need long-term care. With a partial-indemnity policy, you receive a daily benefit once you receive at least one hour of long-term care per day.

Aaron Skloff AIF, CFA, MBA, is chief executive officer of Skloff Financial Group, a Registered Investment Advisory firm based in Berkeley Heights, New Jersey. He can be reached at http://www.skloff.com or 908-464-3060.