Guidelines for Shopping Long Term Care Insurance Policies
As you shop for long term care insurance, keep the following in mind:
- Look for policies that provide compound inflation protection at a realistic percentage.
- Avoid policies that use "continual one-on-one assistance" as a requirement to qualify for benefits. Few people who need long term care require continual one-on-one assistance.
- Only buy a policy that clearly defines and illustrates all criteria for qualifying for benefits, including the criteria that determine the inability to perform the activities of daily living (ADL).
- The policy should explain clearly and completely the claim filing process and the process for appealing the company's benefit decisions.
- Do not rely on any promises made in promotional literature or by an agent. Anything not in the insurance contract does not exist. If you cannot understand the insurance contract, do not buy the policy until you have had all your questions answered by home office representatives or by an long term care attorney who has reviewed the policy.
- Before buying a policy, determine your income, your assets and your budget. Then decide how much you can afford to pay for long term care insurance premiums. Remember long term care insurance does not cover doctor bills or prescription drug costs. Also, elimination periods, waiver-of-premium provisions, benefit amounts, and inflation protection, and other things affect the price of the policy.
- Keep in mind that premiums for your policy may increase in the future and plan accordingly.
- Never be pressured into signing an application. Always ask the agent for a copy of the policy you are considering. Don't let the agent convince you that the outline of coverage tells you everything you need to know about your policy. As the name clearly states, it is only an outline; so you need the policy. If the agent won't get you a copy, find another agent. Even though you have a free look period during which you can return the policy and get your premium back, you should review the policy beforeyou give the agent a check. Then you won't have to wait for the premium refund if the policy is not what you expected.
- Ask about all options available for your coverage. Most policies offer choices in the following areas: benefit amounts, benefit durations, elimination periods, inflation protection, and nonforfeiture benefits. Make sure you are offered all the options – not just those the agent decided were "best for you". Use the worksheets to help you compare various policies.
- Be sure you understand the qualifying requirements for benefit eligibility. Ask questions so you know how much assistance is required to qualify you for benefits and the performance criteria needed for cognitive disorders such as Alzheimer's disease.
- Know the policy restrictions on benefits. Will you be able to receive benefits for home care services? Are there facilities in your area that meet the requirements for nursing home benefits? Are these facilities acceptable to you?
- Know how to file a claim and how to appeal an adverse decision. You can file a law suit against your insurance company, but most companies allow only a short period of time for you to file the legal action. You can waste no time in deciding to sue or in finding counsel with experience in suing insurance companies for breach of contract and breach of the covenant of good faith and fair dealing.
- Make sure the insurance company you choose is highly rated. Only do business with companies that have an "A+" or "A" financial rating. High ratings do not guarantee future stability, but low ratings area a warning that the company may have problems in the future.
- Do not buy a policy because it has the lowest price. Policy benefits, limitations and benefit eligibility qualification requirements vary greatly, so you cannot compare policies solely on the basis of cost. Use a worksheet to compare.
- Once you purchase a policy, do not trade it quickly for something that is promised to be a better contract. The agent may just want the new first year commission. Trading up is often expensive and may subject you to new pre-existing waiting and elimination periods.