The Truth About Long Term Care insurance??? Not.
March 20, 2007 · Print This Article
You sometimes hear a journalist talking about long term and elder care. Sometimes they’re right, sometimes they’re wrong.
But one thing we can all agree on is that elder care is becoming a big problem. As our health care improves, we live longer. The longer we live, the more apt we are to need long term care.
Elder Law Prof Blog has taken the time to aggregate articles from the U.S., Canada, the UK, and Japan, to name a few and I commend him for that. However, the writer of the blog, I think his name is Ed, doesn’t seem to have the most positive opinion about long term care insurance. He listed a Oct. 20, 2006 New York Times article as “The truth about long term care insurance”. The word “truth” is his opinion.
Now, while the New York Times article itself makes some valid points, I’d like to clarify the below 3 points.
1) LTCi companies wouldn’t be able to make their pay-outs due to increasing claims.
This shouldn’t be a problem, as insurers must have insurance themselves. By law, they must meet their obligations, one way or another. Either they sell out their block of business to a more profitable and stable insurance company OR the insurer’s insurance must kick in to cover the costs of benefit pay-outs.
The long term care insurance companies that charged minimum policy premium amounts and have opted to not “sell out” have drastically increased their premiums, both on new policies and existing policy holders. This is not good news for the folks who bought inexpensive policies and are now seeing their rates increase, but it does mean that the LTCi companies have seen looming problems and have acted to remedy those problems.
2) Insurers have denied claims due to the policy holder not fully disclosing pre-existing medical conditions at the time of application.
I’m sorry, but that is a problem caused by the consumer, not the insurer. If you think you can hide any pre-existing medical conditions, think again. You will be caught sooner or later, either by an underwriter or by the claims department. Don’t think that if the LTCi company doesn’t ask to see your doctor’s records, that you can get away with having a pre-existing condition. If your LTC insurance agent is not making sure that you have disclosed every medical problem that may influence your LTCi eligibility, then that agent is not doing his or her job properly.
3) Some long term care insurance policies require you to document your state of health when you file your claim and thereafter.
Now this could be a problem! Once it has been deemed that you need long term care and you start receiving your LTCi benefits, you should not have to continue to send in statements from doctors or facility administrators. Your health may not allow you to either do that personally or ensure that it is done by someone else. So, make sure that the policy you buy has the least amount of documentation requirements possible during your benefit period.
Get personalized long term care decision assistance from your LTCi Buyer’s Advocate today.
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I am 57 my wife is 56 and was quoted a premium of $4700+/- through Genworth. This included a $200 dollar/day for 8 years. After some discussion we looked at a $150-6 year plan at $3500+/- . My financial advisor tells me I can afford the higher premium. Were both in good health today and I’m of course reluctant to spend that much money for something we might need! Is something better than nothing or am I just being foolish trying to save $1200/year?
In my opinion, if a person can afford a really great policy (and can CONTINUE to afford it), then why not get the best coverage available? If you eventually need long term care you will want to be able to afford the nicest facility or the best home care possible, won’t you?
$1200 per year more means an extra $50 per day in benefits pauyout for 2 extra years. If you need care and you prefer a facility that costs $200 per day, but you only have $150/day worth of benefits, you would need to self-pay over $18,000 per year to make up the difference. That’s over $36,000. It would take 30 years of saving $1200 per year to equal $36K, but by that time the cost of care will have gone up substantially. So you’d still be left wanting. And personally, considering the vagaries of investment markets, I wouldn’t trust investments to pay the difference. Ever.
The choice is yours: Pay an extra $1200/year for more coverage now, find a less expensive (probably less attractive) care facility if/when you need it, or self-pay the difference.
Also Very Important: On a national average, care facilities currently cost around $150/day. However, the rate of inflation for the long term care sector is at about 6% . Considering our economy these days, it could get much higher. Don’t skimp on inflation protection!!!