Confused between Stated Period Policy and Pool of Money

Posted: Thu Dec 24, 2009 11:54 pm Post Subject:

Stated period means you can receive benefits for a certain period of time say $200 per day for 5 years. Pool of money allows you to look at total benefit for this scenario ($365,000) and spend it as quickly as possible.

Sometimes this is only applicable to joint plans where each insured can share the entire pool (so in the example above $730,000) between each other. This would allow one insured to use more benefits than the other because they require more care.

Posted: Sat Dec 26, 2009 03:36 am Post Subject:

BNTRS, can you name one policy that works the way that you are describing? I don't know of one.

julietegcy, most policies are for a stated period AND they have a pool of money. Ex. BNTRS has a policy for $200/day and it's a 5 year policy. The total benefit is $365,000, but no more than $200 can be used in a day. Let's say that he only uses $100/day of this policy, the policy will actually last for 10 years.

In short, he has a $365,000 pool of money, but no more than $200 can be used in any specific day. The policy lasts until the money runs out. Because the daily limit is $200, the policy can't run out in less than 5 years.

Posted: Sat Jan 02, 2010 07:17 am Post Subject:

A stated period policy limits claims to the time period. If you have a five year benefit period (1825 days), without the expansive language of "pool of money" your claim would be limited to the claims submitted during that time period, regardless of the amount of the claims submitted. In short, the time limit imposed could prevent you from collecting the full $$ benefit of your contract.

The pool of money concept changes the formula by allowing your claims to continue beyond the stated period until the money has been used up. Using the $200 example above, if you only used $100/day, your benefit would not be exhausted before 3650 days had elapsed. Federal law requires a tax-qualified LTC policy to conform to the pool of money formula.

If the policy permits aggregating benefit multiples ("up to 7x the daily limit in any one week" or "30x the daily benefit in any one month") which allows spending more than $200 in any one day, it is technically possible to exhaust your 5 year benefit in slightly less time than 5 years, but only by a matter of days.

Posted: Sun Jan 03, 2010 02:25 pm Post Subject:

Since I've spent too much time busting on you, let me take the time to thank you.

Posts like this are very helpful to those reading the board.

Posted: Sun Jan 03, 2010 02:59 pm Post Subject:

Duly noted. Thanks.