Long-Term Care Indemnity vs Reimbursement

I'm here to share my insights about two main types of policies that I often discuss with clients: long-term care indemnity vs reimbursement. Each has its own set of advantages, and I want to help you figure out which one might be the right fit for your needs.

My Experience with Reimbursement Policies

I've found that long-term care reimbursement policies are pretty straightforward in their approach: they'll repay you for your qualified long-term care expenses after you submit a claim. Here's what I've observed:

  • Covering the Costs: These policies will cover you when you opt for professional services, like assisted living or skilled nursing. The insurance company will handle the reimbursement, based on your policy's terms.
  • Specifics on Services: It's essential to know that these policies are designed to cover professional services. So, as much as you might want to, you can't use them to pay a relative for tasks like cooking or cleaning.
  • Opting for Lifetime Benefits: One thing I often highlight is the potential to set up these policies for lifetime benefits. Considering conditions like Alzheimer's that could span over years, this can be a significant advantage.

Pros & Cons of Long-Term Care Reimbursement Policies


  • Direct Coverage of Expenses: Reimbursement plans cover the costs of qualified long-term care services up to the limit of your policy.
  • Applicability: These policies are useful for professional services, such as those provided in assisted living or skilled nursing facilities.
  • Lifetime Benefits: Reimbursement policies can be set up to pay out benefits for the lifetime of the policyholder, which can be crucial for long-duration conditions like Alzheimer's.


  • Limited Service Scope: Payments are specific to qualified medical services. You cannot use the benefits to pay non-professionals, like a family member, for informal care.
  • Reimbursement Process: Claims must be filed, and expenses are reimbursed after the fact, which might require upfront out-of-pocket spending and waiting for repayment.

Why I Often Recommend Indemnity Policies

The uniqueness of long-term care indemnity policies lies in their flexibility:

  • Freedom to Spend: Once you qualify for the benefits, which usually means being unable to carry out two of the six ADLs, you're given a set monthly amount. How you spend it is up to you. Whether you're looking for traditional care or even fancy a getaway - it's your call.
  • Transparent Terms: I often show clients an illustration from an actual policy to emphasize this: "You can use the indemnity long-term care benefits however you want, without any hidden clauses. It's truly your choice on how to use or save the benefit."
  • A Heads-up on Costs: While the flexibility is great, I always remind clients that this choice comes at a price. Indemnity plans tend to have higher upfront costs for similar benefits when compared to reimbursement policies. Plus, there's usually a cap, with around eight years being the maximum coverage duration in many cases.

Pros & Cons of Long-Term Care Indemnity Policies


  • Flexibility: Once qualified for benefits, you receive a set monthly amount and can spend it however you choose, without needing to justify each expense
  • Broad Scope: Benefits can be used for traditional long-term care services or any other need, from paying a neighbor for chores to leisure activities.
  • Transparent Terms: As exemplified in the policy illustration in the transcript, the use of funds comes without fine print or restrictions.
  • Potential for Saving: If monthly expenses are less than the monthly maximum benefit, the difference stays in the policy, potentially extending the benefit period.


  • Higher Initial Costs: Indemnity plans generally cost more upfront for the same benefit amount compared to reimbursement plans.
  • Duration Limit: Indemnity plans often have a capped benefit duration, with many policies offering coverage for up to about eight years.
  • Opportunity Costs: Parking a lump sum of money into the policy might have forgone potential returns if the money was invested elsewhere.

In wrapping up, I genuinely believe that understanding these policy types can greatly influence your financial planning for long-term care. Whether you're leaning towards the structure of reimbursement or the freedom of indemnity, it's crucial to pick what aligns best with your vision.

And always remember, I'm here to guide you every step of the way. Don't hesitate to reach out.

Wishing you all the best,