Learn about long-term care insurance
【Personal Finance Series】
When it comes to long-term care insurance, I have made a series of sharings and appeals on this issue many years ago. The theme is: "Global humanity's next tsunami - long-term care."
Taiwan's "long-term care insurance" (hereinafter referred to as long-term care insurance), in July 2015, at the request of the Financial Supervisory Commission, the original name of "long-term care insurance" (hereinafter referred to as long-term care insurance) was unified and corrected. The Insurance Bureau stated on April 19, 2018 that in order to respect people with physical and mental disabilities, the Executive Yuan has passed an amendment to the Insurance Law, changing the term "disabled" in the Insurance Law to "incapacitated."
The Legislative Yuan read the amendments to the "Inheritance and Gift Tax Law" for the third time on April 25, 2018. In order to raise financial resources for long-term care, the inheritance tax and gift tax will be increased from the original single rate of 10% to three stages of 10%, 15% and 20%. Progressive tax rates. The Ministry of Finance estimates that after the law is revised, it will be able to inject NT$6.3 billion into long-term care every year. This shows that long-term care issues and required funding expenditures will severely impact Taiwan.
Long-term care insurance is roughly divided into three categories: long-term care insurance, specific injury and illness insurance (also known as long-term care insurance), and disability insurance (disability assistance insurance). This raises the following series of questions: There are so many types of products, how to choose? Do I need it? How to make a claim? How is a claim determined? How much does it cost to plan? Is it necessary to incorporate a savings function? …
Whenever asked, I always discuss the following questions with my clients first:
Long-term care through insurance planning What is the real purpose of insurance?
What problem do you hope to solve? Why is planning needed?
Three major types of long-term care insurance in Taiwan
Type 1: long-term care insurance
"Long-term care status": refers to the insured person who is diagnosed by a specialist and meets one of the following two conditions: physiological dysfunction or cognitive dysfunction.
1. Physiological dysfunction:Refers to the insured's ability to take care of himself in six areas of daily living, including eating, shifting, going to the toilet, bathing, moving on land and changing clothes, as determined by a specialist based on the Barthel Index or other clinical professional assessment scales. (Activities of Daily Living, ADLs) Persistent presence of three or more obstacles. The definitions of impairments in the six aforementioned activities of daily living (ADLs) are as follows:
1. Eating disorder: Requires assistance from others to take food or put on and take off eating aids.
2. Impairment in moving: Requires assistance from others to move from bed to chair or wheelchair.
3. Impairment in using the toilet: needing help from others to maintain balance, arrange clothes or use toilet paper during the toilet process.
4. Bathing impairment: Requires assistance from others to complete bathing or showering.
5. Impaired mobility on level ground: unable to move despite being supported by others or using assistive devices, and requires assistance from others to operate a wheelchair or electric wheelchair.
6. Obstacle in changing clothes: You need complete assistance from others to put on undressing pants, shoes and socks (meaning limbs, braces).
2. Cognitive dysfunction:It means that the insured person is diagnosed with persistent dementia by a specialist (referring to the International Classification of Diseases, Injuries and Causes of Death, Ninth Edition (ICD-9-CM) No. 290, No. 294 and No. 331 The symptoms mentioned in Point Zero are as shown in Appendix 1 of the policy) and have difficulty in distinguishing, and are assessed as moderate (inclusive) or above (i.e. 2 points or above) according to the Clinical Dementia Rating Scale (CDR) Or those whose Mini Mental State Examination (MMSE) reaches moderate (inclusive) or above (that is, the total score is less than 18 points). The aforementioned "impairment in discrimination" refers to the situation where a specialist determines that the insured has two or more (inclusive) of the following three impairments in discrimination when the insured is conscious:
1. Time discrimination disorder: Often unable to distinguish seasons, months, morning and evening time, etc.
2. Difficulty in distinguishing places: Often unable to distinguish where one lives or where one is currently.
3. Difficulty distinguishing people: Often unable to distinguish family members or people who are usually together.
There is also an "exemption period": it refers to the period starting from the date when the insured is diagnosed as a "long-term care status" by a specialist, and continues to meet the "long-term care status" for ninety days. (Information comes from insurance companies’ long-term care insurance terms)
Type 2: Specific injury insurance (also known as "long-term insurance")
Insurance benefits vary according to the number of specific injuries and illnesses in the policy terms. The earliest critical illness insurance launched only covered seven major illnesses - myocardial infarction, cancer, stroke, paralysis, major organ transplantation, coronary artery bypass surgery, and kidney dialysis (chronic kidney disease).
Later, insurance companies launched specific injury and illness insurance, which gradually included specific major diseases that have been common in recent years, such as Alzheimer's dementia, Parkinson's disease, lupus erythematosus, motor neuron disease, and major burns and scalds. wait. The more projects there are, the higher the premium will be.
In Taiwan, when specific injury conditions are indeed met, there are two ways to settle claims:
1. The contract is terminated when the insured amount is paid in full.
2. Claim half of the insured amount first, and the other half of the insured amount will be paid out in the future upon death, and the contract will be terminated.
Therefore, strictly speaking, this type of insurance does not belong to the long-term care type.
The third type: disability insurance (disability assistance insurance)
Taiwan’s current disability insurance claims, whether for persons with disabilities of grades 1 to 6, or expanding the scope of coverage to 11 degrees of disability, are mostly for physical disability. Insurance benefits will be paid in an agreed proportion or amount according to the degree of disability, and must reach a level of 1 to 10 years. Only those with level 6 disabilities can receive regular disability benefits (currently, disability benefits are also paid regularly for people with level 1 to 11 disabilities, and the premiums are relatively high). At present, insurance companies mostly determine the claim settlement ratio based on the listed disability (i.e., disability, old policies still use the word "disabled") level table. The latest disability insurance has added 75 items to 11 levels.
▲ "Whoever does not take care of his relatives has denied the truth and is worse than an unbeliever, especially if he does not take care of those in his own household." (1 Timothy 5:8) So planning is very important.
The need for planning long-term care insurance
After understanding the types of long-term care insurance, let us think together; why do we need to plan for long-term care insurance? What impact is there on the family when a long-term care situation occurs?
People will inevitably experience birth, old age, illness, death, and disability in their lives. Among these different stages, which one has the greatest impact on the family? So far, most people consider it a condition of disability. why? In recent years, the age group experiencing disability has been gradually decreasing due to accidents, various types of stress, financial and emotional problems. Secondly, workload, financial pressure, family illness, unemployment, etc. often cause great physical and emotional reactions, especially among middle-aged and middle-aged people, who have increased disability due to taking care of their parents, work, and family.
When disability occurs in middle-aged people, the biggest and most direct impact is the interruption of economic income, or the reduction of family income and the rapid increase of medical expenses. In addition, all household expenses still have to be continued, such as rent, mortgage, daily life, water, electricity, gas, food, clothing, housing and transportation expenses, etc. If there are children in school at home, they must also pay tuition fees, etc., and may even need financial assistance from their parents, or use their parents' pensions.
When the elderly become disabled, in addition to the above situations, family meetings are often held to discuss the allocation of increased monthly expenses, nursing care, and care costs, and even whether any children are willing to leave the workplace to take care of the elders at home. It is also common for these issues to cause family discord.
Here is a special note: Each child’s income, family burden and financial situation are different. It is really difficult to use equal sharing to solve the expenses that will last for an unknown period of time.
As a financial planner, I always remind my friends: long-term care can be said to be a bottomless pit, and it is the last dignity of a person's life.
“Whoever does not take care of his relatives has denied the faith and is worse than an unbeliever, especially if he does not take care of those in his own household.” (1 Timothy 5:8) But in the process of taking care of yourself, if you do not take care of yourself, you will be worse than an unbeliever. Well, they often have a bad conscience; if they take good care of themselves, there are many cases of them being bedridden for more than 10 years. Therefore, in the face of interrupted income and constant expenses (or even increased expenses), how a family should face the endless challenges and difficulties in the future is something that long-term care insurance or disability insurance cannot ignore and must even face up to. question.
Reminders for planning long-term care insurance
First, have you planned complete lifelong medical insurance? Please refer to the author's article notes in "The Kingdom of God Magazine" to review your current insurance planning status. Usually, before you actually start to apply for long-term care insurance and disability benefits, there will be a series of medical actions. Therefore, it is most important to plan a complete lifelong medical insurance for yourself. The insurance age and underwriting rules are longer than those for long-term care insurance and disability benefits. The insurance can be more stringent.
Second, it is recommended to plan disability insurance (disability insurance) first. In addition to expanding the scope of disability protection, the cost is also more in line with the needs of the public.
Third, it is recommended that the insurance amount be based on at least NT$30,000 per month. If your income and responsibilities are relatively large, it is recommended to increase the insured amount to meet your actual living needs. Disability pension in Taiwan is divided into monthly payment or annual payment. You can choose to purchase according to your own needs and actual living conditions.
Fourth, is it necessary to combine the savings function? It is recommended not to. Chinese people like to combine savings and have the feeling of saving money, and they feel that they are not at a disadvantage or wasting money. However, they also spend a lot of money on savings, and the proportion of long-term care insurance is relatively small. What needs special attention is that if the saved money is withdrawn in the future, will it affect the claim amount of long-term care insurance? This is a question worth pondering and understanding.
Fifth, when applying for claims every year in the future, do I have to provide a new diagnosis certificate every year for claim settlement, or is it just a survival certificate? It is recommended that after the first claim determination, you plan to apply for a policy that only provides proof of survival for claims every year in the future.
May God give us wisdom when it comes to financial allocation and use, so that we can be a blessing to ourselves and others.
Note:
Issue 52 "Financial Risk Management: Medical Care", Issue 53 "Financial Risk Management: Medical Practice"
Pan Huating, general manager of Gabriel International Wealth Management Consulting Co., Ltd., founder of Gabriel Saint Financial Team, CEO of Taiwan Aetna Insurance Brokers Company, possesses international financial planner and psychological counselor certificates, and is an appointment member of the Chinese Boaz Association Teacher at Shuya School of Management. He loves life and devotes himself wholeheartedly to domestic and foreign gospel ministries, serving the disadvantaged in rural areas and poverty alleviation projects. He also participates in the ministries of entrepreneurs achieving kingdom enterprises and the Great Commission, and using his life to influence lives.