1. Impairment in Activities of Daily Living (ADLs)
“Activities of Daily Living” (ADLs) are used to
gauge your physical abilities to determine if you be eligible for insurance
benefits. The law needs tax-qualified insurance policies to pay benefits
if you are damaged in 2 out of the following 6 ADLs: bathing, dressing,
transferring, eating, toileting and continence. For non-tax qualified
insurance policies, the requirement is for 2 out of the following 7
ADLs: ambulating, bathing, dressing, transferring, eating, toileting
and continence. Note that the additional ADL for non-tax qualified insurance
policies is ambulating that means walking or moving about inside or
outside the home in spite of the use of a cane, crutches, or braces.
Only two ADL’s could be necessary before insurance
benefits would be paid for nursing home care, RCFE care, or home care
insurance policies sold after October 1, 2001.
“Impairment” means that you are in need of human assistance
or continual supervision to perform your Activity of Daily Living. Insurance
policies that activate benefits when you only have to meet one of the
ADL’s might begin paying benefits earlier in your disability than if
you have to meet two. However, your premiums would be higher and the
insurance policy would not be tax qualified.
2. Impairment in Cognitive Ability (or Cognitive Impairment)
“Impairment in Cognitive Ability” means that you
are in need of supervision or assistance to protect yourself or your
spouse because of mental deterioration caused by Alzheimer’s disease
or any other mental disease.
A doctor diagnoses cognitive impairment based on clinical
proof and by the use of standardized tests.
3. Medical Necessity
“Medical Necessity” generally means your doctor
has certified that your medical condition would get even worse if you
do not receive the care recommended. However, under California state
law, an insurer is not allowed to require your insurance benefits let
it also be “medically necessary” before the company would pay. Federal
law bans the use of a medical necessity activate in tax-qualified long
term insurance policies.
