Per Diem Benefit

Example

“Maria's long-term care policy includes a $200 per diem benefit, meaning she receives $200 for each day she requires nursing home care, regardless of whether the facility charges $180 or $250 daily.”

Memory Tip

Remember 'Per Diem = Per Day Dollar Amount' - you get the same dollar amount per day, like a daily allowance.

Why It Matters

Per diem benefits provide predictable income during challenging times and eliminate the hassle of submitting receipts and waiting for reimbursements. This structure gives policyholders flexibility to use funds as needed while simplifying the claims process for both insurers and insured parties.

Common Misconception

Many people think per diem benefits will cover all their care expenses, but the fixed amount may not match actual costs in their area or for their specific needs. Some also assume they must spend the entire per diem amount on care services, when they can often use it for any expenses related to their condition.

In Practice

Robert has a disability policy with a $120 per diem benefit after a 30-day elimination period. When he becomes disabled and cannot work, he receives nothing for the first 30 days. Starting day 31, he receives $120 daily ($3,600 monthly) for the duration of his disability, regardless of his actual living expenses. Even if his monthly bills total $4,200, he still receives only $3,600, but if his expenses are $3,000, he keeps the extra $600.

Etymology

From Latin 'per diem' meaning 'per day' or 'for each day,' combined with 'benefit.' The concept has ancient roots in daily wage payments but became common in modern insurance in the mid-20th century for simplified claim processing.

Common Misspellings

Related Terms

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