Long Term Care Insurance: Five Simple Steps for Comparing and Choosing Policies
Every insurance policy is a legal contract. Once agreed
upon by both parties, a long term care insurance company
must uphold their contract to the letter, or risk lawsuits
and regulatory prosecution. Each policy is crafted with
utmost care using the probabilities of actuaries, as well
as contract lawyers' keen legaleze, and here's how to
navigate the decision process.
Understanding the wording of a policy and correctly
comparing policies from various companies can be daunting
for most folks and exhausting. You must develop a grasp of
insurance lingo, and it wouldn't hurt to know how specific
points in each contract have been interpreted by courts of
law, either.
In case you weren't aware, the LTCi sales brochures are not
contacts. Sales brochures are created to briefly explain a
product and to entice you to buy it. What is printed in a
brochure does not represent the intricacies of contract
law, yet the brochure MUST, by law, be congruent with the
related, legal contract.
Even worse, no insurance company's promotional literature
can be trusted to thoroughly detail the terms of the target
policy/contract. Sales is sales, and truth is truth.
(Although, in most states, it is against the law to
knowingly produce long term care insurance marketing
materials that mislead the public.) I don't believe the
Madison Avenue style brochures and commercials which I see
created to push pharmaceutical drugs. Instead, I go online
and research the contra-indications, side-effects,
suitability of the drug for a particular aliment, as well
as law-suits against the company manufacturing it. That's
called "due diligence" and we owe it to ourselves to do our
due diligence when it comes to matters that will affect our
loved ones and ourselves.
Research pertaining to your decision about long term care
insurance is no less important than what you put in your
body. So, you must read your policy contract thoroughly. If
you have any doubts about the meaning of the wording in an
LTCi contract, or whether that contract will protect you
when you are in need (as you think it will) you'd be wise
to get expert help deciphering the policy.
That said, here is the order in which to do your research:
1) Talk with your family about your decision to buy long
term care insurance. Also, any friends who have a family
member who has purchased LTCi in the past, and has gone "on
claim", can be great resources. They've "been there, done
that" and have experience with the claims process.
However, I would NOT recommend taking family members' or
friends advice about which policy to buy. They are not
qualified to help you. Sure, they would be able to steer
you away from a particular company or policy if they have
had significant problems during claims time, but deciding
which policy would be the best considering your financial
and health situations should be between you and a trained
(and legally licensed) LTC insurance broker.
2) I suggest that you use a trustworthy Long Term Care
insurance BROKER, not a captive agent. A captive agent
only represents one company. That may be good for the
company, but it certainly may not good for you. Make sure
that your broker represents SEVERAL long term care
insurance companies with the highest ratings. Any company
considered should have a B+ rating or better.
How do you find an LTCi broker with integrity? Well, you
can, but you do not need to go through an "established"
insurance firm or agency. Just because a firm or agency is
established doesn't mean every agent within that agency
will be someone with whom you'd feel comfortable entrusting
your future. There are just as many "sharks" inside
insurance firms as there are outside of them. Interview
brokers until you find someone with whom you enjoy good
rapport.
I recommend that you begin by connecting with the Buyer's
Advocate for free, no-obligaion comparison quotes
You want someone with experience, a deep knowledge of all
the companies' policies that he or she represents, and a
compassionate heart. Knowledge of policies will be helpful
in finding the policy you most desire. Experience comes in
very handy if you have health issues. An experienced
broker not only knows which policy might suit your long
term care desires, but also which companies' underwriters
are the most lenient for your particular health problem. Of
course, a compassionate heart is the soul of your
relationship and should be a sought after and respected
part of the equation.
3) After you have found a broker with whom you feel
comfortable, then have a conversation about your financial
and health situation as well as your preferences for long
term care (nursing facility only, assisted living, home
care, day care, etc). Check out what each policy has to
offer and it's restrictions concerning things like
restoration of benefits, how many ADLs are required to
trigger benefits and whether there is the need for medical
supervision. Also consider the various optional benefits
such as inflation protection, non-forfeiture, etc.
Look over the sales brochures that your broker provides for
you. There may be several company and policy options. The
sales brochures will help you narrow down your decision as
well as bring any question you may have to the forefront.
4) Read your Outline of Coverage. In Arizona, the law
states that an outline of coverage must be given to every
applicant. The Outline of Coverage must truthfully state
the basics of the policy. Written in lay terms, the Outline
of Coverage more intricately describes what the policy will
cover, bit it's not a comples as the actual contract. From
this, you can pretty much make up your mind about which
policy you want. HOWEVER, an Outline of Coverage is a
binding contract. It does not cover every aspect of the
policy. The only way to be absolutely sure about the exact
wording of your LTCi policy is to decipher the contract
itself. READ THE CONTRACT! Again, if you are not entirely
sure about what the wording means, then get a legal
professional to explain it to you.
5) Depending upon your purchase time line (Do you want LTCi
protection right now or can it wait a few days, weeks,
months) you can request a sample policy from your broker.
If you want to buy sooner than later, you can fill out an
application. If you are approved, you will get your actual
policy to review for 30 days.
In Arizona, there are no worries if you buy an LTCi policy
first and look afterwards. By law, you have a 30 day "free
look" period that you can use to pick your policy apart
with the help of a good insurance contract lawyer. And it's
not a bad idea to do so, if you have the money.
Before you start your buying process, call your Department
of Insurance to verify that there is a "free look" period
in your state.
Keep the envelope in which the policy was mailed and/or
insist that your agent give you a signed receipt or
delivery when he or she hands you the policy.
If you decide to return the policy, you must send it to the
insurance company along with a letter requesting that the
policy be canceled and your premium refunded. To make sure
that the long term care insurance company received your
letter and policy, send them both by certified mail and
keep your mail receipt.
Keep a copy of your correspondence with the insurance
company until the refund process is totally competed. The
refund process usually takes 4 to 6 weeks.
With these steps covered you'll be set.
