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.