Long Term Care Insurance Checklist

If you are one of a growing number of individuals wondering how the heck you’re going to pay for your own long term care, should you need it, you’ve probably given Long Term Care Insurance some thought, or at least wondered what it’s all about.

If you are even more serious about Long Term Care Insurance, we’ve done the research and come up with a list of things to look for, and avoid in a LTC policy.  Before diving deep with any provider, have a look at this list in addition to speaking with a trusted professional such as a financial planner.

LTC Products vary dramatically from plan to plan and from provider to provider. Here are some basic considerations for what to look for in a policy.

• Be sure special features are worth the high premiums (compare basic packages with more expensive ones to see what the difference really is)
• Check out any LTC options available through employers
• Go for a well-known company with a solid track record (esp. important because field is so young)
• Ask how long a company has been selling LTC and look for longevity in the marketplace (i.e. at least 10 Years or more)
• Check to see if the company falls into the top 3 financial ratings on the website of Standard & Poor’s, A.M. Best, or Moody’s
• Contact the state insurance department to check up on the company you’re considering
• Look for tax-qualified policies
• Unless you’re absolutely clear the insured wants to end up in a nursing home or other facility, make sure the policy is comprehensive, covering in home care, hospice, adult day care, and respite care
• Make sure the policy has early eligibility. Policies have “triggers” such as the failure of the ability to perform one or more activities of daily living. Be sure the policy you’re considering does not necessitate an undo amount of impairments before it kicks in. Good policies should cover dementia, congestive heart failure, cognitive impairments, etc.
• Look for policies with deductible periods that are somewhere from 30-50 days. Shorter deductible periods translate into expensive policies, while longer periods of 100 days or more translate into policies that will most likely not be of use
• Make sure your provider is flexible, ESPECIALLY in these times of changing healthcare policy
• Make sure the policy is not susceptible to significant inflation; most policies should have a 5% rate compounded annually
• Be certain that the company will not raise the premium once purchased; companies are not allowed to raise premiums on individual policies
• The policy should also include waivers that protect the insured from paying premiums while receiving long-term care
• Make sure the policy covers Alzheimer’s and dementia
• Be sure the policy has a 30 day return clause
• Look for policies with Nonforfeiture Protection. This is often a costly provision, but particularly important for younger buyers. It ensures that if the insured wishes to cancel the policy, they will still receive some value from it. Some companies offer “Contingent Nonforfeiture Benefits.” This provision allows the insured to go back to old rates, if premiums rise over the years. The individual may have to pay more out-of-pocket per day or may undergo a shortened benefit period.
• If you are considering LTC as a married couple, make sure the policy has marital discounts. Some companies offer “straight benefits”, others offer “split benefits” where, if one spouse dies, the other gets the total remaining coverage.
• Scrutinize what the policy doesn’t cover. Some policies do not cover existing illness, mental illness, or addiction. Also look for ambiguous clauses like “usual and customary costs,” “prevailing costs,” or appropriate costs.” Be sure you fully understand what these mean.