What is the difference between 'indemnity' and 'expense incurred' long term care insurance?

A "per diem" or "indemnity" long term care insurance policy will pay up to a fixed amount of benefits.

An "expense-incurred" long term care insurance policy allows you to choose the benefit amount when you buy the policy. It reimburses you for actual expenses incurred, up to a fixed amount per day, per week, or per month.

Note that no policy will pay unlimited benefits.


An indemnity long term care (LTC) insurance pays a specific daily amount based on your policy, supposed you get an indemnity ltci with benefits amount of $300/daily for a benefit period of 3 years, and you require long term care later, let's say your daily ltc expenses is $150, you will still get $300 regardless of your daily ltc expense, you have the freedom to decide where you are going to spend the excess $150. This is fixed for 3 years, depending on the benefit period you choose. So if after three years, you still need care, you will have to pay the cost out of your pocket

An expense incurred ltci reimburesed you with exact amount for your care. Supposed you bought an expense incurred ltci with daily benefit of $200 for 3 years and your daily ltc expenses is $100, you will be reimbursed with $100 and the excess will be kept as a savings so you can extend your benefit period. If after three years you still need long term care, since you saved $100 from your benefit amount, the insurance company will cntinue paying for your expenses even if you only bought a 3 year benefit period policy, until your savings are all spent.