As an Independent LTCI Planning Specialist I can confidently give some good advice on buying LTCI. Look at 4 key pieces of information available independently online AND from the agent in writing with their state license number on the paper when buying:
How many years has the ins company been selling LTCI and have they raised rates on inforce policies? If so, how many times over how many years; this will tell you if they're worthy. Zero or one rate increase from policies in force for 15 or 30 years is actually very good. No rate increases are very rare. I always say, even if a company has never had a premium increase, "expect a 10-15% rate increase every 10-15 years." If the company never raises I'm a hero. If the company raises I look honest. As of this writing I have 22 years of experience with not one complaint letter on my record.
What are the financial ratings of the ins. company? Look at AM Best, S&P, and Moody's; look for "superior" or better; there is no need to buy from a poorly rated company ranked less than A from AM Best.
What is the customer complaint ratio of the ins. company? Is it 0 per 10,000 or a lot higher? This will be a possible indicator of their history of playing claims games or denying claims. A 0 or 1 is very good. Anything over 5 is an indicator of problems.
It is extremely important that the agent is "State Partnership Licensed/Certified". Are they only showing you companies that offer "Partnership Approved Policies"? Do they represent many companies as a broker? Compare apples-to-apples premiums on at least 3-4 companies you pick as a customer in addition to whatever they show? Look for a simple one page partnership sheet with the price illustration. Look for a one page spreadsheet comparing plans offered. This will keep you away from "Captive Agents" selling only one or two companies and allow you to make an intelligent decision.
Start with a $100/day plan with a 3 year benefit, 90 day "Calendar Day NOT Service day" elimination period. Add the inflation rider for the partnership match (may be simple % or compound %), add a monthly benefit payout rider, and add a "Home Care Waiver of Elimination Period" for a nice policy. "Shared Coverage" can be a big positive in addition to not smoking, qualifying for preferred rates, and obtaining a couples discount too if you have lived with someone, even a sister or brother, for some time.
Planning ahead for LTC is tough. However, premiums can actually be very low if you think ahead. It is hard to think ahead 20-30 years or more and pay premiums for that long. But, if you look at the risk at 70% of all those over 65 needing care for an average of 3 years, then look at the cost-benfit analysis of LTCI, it becomes a quick no brainer; especially when comparing all the different alternatives with those premium dollars. You'll see if you do a little homework and investigate with a local qaulified reputable agent. You do not have to buy but you'll know.
Dean Friedman Long Term Care
of FL
@
Jun 23, 2009 03:01:30 AM
LTC carriers
The problems noted with insurance companies is easily rectified - buy from a reputable company. There are several who have been in the market for well over a decade, so they know what they are doing - Allianz, Genworth, John Hancok, and Bankers to name four. If you buy LTC from an inexperienced company, to get a low rate, you are asking for rate adjustments as the company gets experience.
I've had a policy for myself and my wife for 10 years with no rate increases. We are both fully protected is and when either of us has a medical difficulty.
The best time to buy this product is in your 50s and early 60s. If you wait, it's just like life insurance - the mathematics say the companies must charge more. Insurance is risk sharing, not charity or government.
JR Gordon
of FL
@
Jun 18, 2009 17:46:23 PM
Policy
I had a long term policy for my wife and myself and one month they raised the policy 35%. I cancelled the two and i still have 11,00.00 in my wife's and 6600.00 in my policy that was taken over by Pioneer. Why would i trust another company to not do the same?
Ernest Frishman
Helen Koklas
Ernest Frishman
of SC
@
Jun 18, 2009 16:07:14 PM
Buy What You Need (And Only What You Need)
LTC insurance can look pretty expensive if you are trying to insure against the full cost of long term care. But it is generally not an all or nothing proposition. Many people can afford to pay a portion of the cost from their assets - in which case the LTC insurance can be used to cover the gap. For example, if the daily cost of care is $200, maybe you can afford to split the cost with the LTC insurance company and each pay $100. First figure out what you really need - then check the cost.
John Kirby
of MN
@
Jun 18, 2009 14:51:04 PM
Long-Term Care Insurance Is Cheap
Wow, after reading the first paragraph why on earth would any consumer ever want to consider long-term care insurance.
Here's one reason (and these are real people from a study just conducted)
A woman purchased long-term care insurance at age 43, paying an annual premium of $1,800. Three years later her claim began and has continued for almost 12 years ($1.2 million in benefits already paid).
Another woman purchased long-term care insurance at age 72 paying an annual premium of $12,766. Three years later her claim began and has continued for almost 9 years ($1.02 million is benefits already paid) for her nursing home care.
A third woman purchased long-term care insurance at age 57 (in 1992), paying an annual premium of $1,215. That same year she had an accident and has been on claim ever since (almost 15.7 years). Total paid (as of 12/31/2008) $989,730 … proving you just never know.
Last year the long-term care insurance industry paid $8.5 billion in benefits for 180,000 Americans.
The cost for long-term care insurance does vary by age and how much benefit you buy. But you can get a base plan of coverage for under $1,000. And, with more states adopting LTC Partnership plans, more people should be considering affordable coverage.
If you think long-term care insurance is "expensive" just wait until we all as taxpayers have to pay the tab for Obamacare. And, if you believe the benefits will be there for those who diligently saved ... well all I can say is look at what's taken place with Social Security and Medicare already.
Please stop referring to long-term care insurance as expensive. This is insurance ... not an investment. And, it's not the lottery - you really don't want to ever need long-term care. But one thing I can assure every reader. If you have some coverage in place ... you'll think this was the cheapest insurance product you ever purchased.
I encourage you to read more on the website of the American Association for Long-Term Care Insurance. We do not sell insurance. Our mission is to educate consumers as well as the many high-quality insurance and financial professionals who market this product. The website address is http://www.aaltci.org. Thank you.
Jesse Slome
Executive Director
American Association for Long-Term Care Insurance
http://www.aaltci.org
Jesse Slome, American Association for Long-Term Care Insurance
of CA
@
Jun 11, 2009 11:53:23 AM
The Economy and Long Term Care Planning
Ok, these are uncomfortable times. The media and the economy have created a sense of withdrawal concerning spending. We all are trying to conserve our dollars and protect our assets and retirement plans. We worry that we may not have what we planned to have. So we think of ways to plan for these changes. Maybe we plan to spend less, or delay retirement, or keep the present car a little longer. But here is a question that we do not want to consider, but must: What would the consequences be to my family and my finances if one of us need care for an extended period of time? This is not about the risk of needing care; it is about the consequences.
You may never need Long Term Care, however; the consequences could be so financially and emotionally devastating to your family, that it must be considered. You need to have a plan. Most often Long Term Care Insurance is the least expensive way to finance that plan. A couple in their 50’s could pay as little as $2,000 per year to have a total benefit of $432,000 available for care. That would certainly be better than taking $432,000 from your income or assets.
Schneider & Shulman Associates are Long Term Care (LTC) specialists. We will custom tailor a plan that is right for you and then find the company with the lowest rates for that plan. We represent only the best companies including: Genworth, John Hancock, MetLife, Allianz, MedAmerica and Prudential. We provide the absolute lowest rates that each company offers.
Call us toll free at 877-843-9582. We offer a FREE consultation by phone, with no obligation. Schneider & Shulman Associates will provide for FREE a comparison of plans and quotes specifically customized for you. Visit our website for more information: www.ssltc.com.
David Shulman, CLTC
of NY
@
Jun 11, 2009 10:47:11 AM
Perhaps
LTCI only paid 7% of the national nursing home bill in 2007 because not enough people trust the process, the insurance companies and the state enforcement (or lack thereof), and for good reasons.
I had a rather bad personal experience with these products in our family and discovered that "the state" had no definition at all of whether a policy was appropriate for the age of the person to whom it was sold. My mother was sold an expensive "return-of-premium add-on rider with her agent telling her that "Hey, if you don't use the benefit, you get your premiums back. How good is that?" He didn't tell her that she would have to have to policy 20 years for that to occur. She was 73 at purchase. Average life expectancy was about 78 then.
She died at 84, not 93 and the expensive add-on rider was a huge waste---actually more like a scam, with the state regulators totally complicit, even after the fact.
So, to Congress, I say regulate, regulate, regulate. Your constituents need you on this one.
Muser
of NM
@
Jun 10, 2009 13:50:20 PM
Good Article, Couple of Points
Thank you for your clear and concise overview of long term care and Long Term Care Insurance.
For the most part, you article is right on the money. There are, however,a couple of items that merit further explanation. While you are correct that this coverage is not appropriate for people without the income to comfortably pay the premiums and/or those that do not have assets to protect, there is no consensus as to if or when someone can have too much money to justify carrying LTCi coverage.
Even though extremely wealthy people can afford to replace their home or their car with their own funds, almost all still carry homeowner's insurance and comprehensive automobile insurance. Given the recent economic downturn, someone who had $2,000,000 in liquid assets may now have closer to $1,000,000. With nursing homes in many markets averaging over $100,000 per year, people in this category are still at risk. Further, Long Term Care Insurance gives policy holders access to a pool of money that is available when they need care. Most people are much likely to hire people for in home care rather than depend on their family when they have someone else's money to spend, regardless of their personal wealth.
With regard to CCRC's, for the most part, the entrance fee covers only the unit and basic services. Many forms of care that are covered by an LTCi policy are not included and residents need to pay extra for these services either from their own funds or their LTCi policy.
Dean Friedman Long Term Care of FL @ Jun 23, 2009 03:01:30 AM
JR Gordon of FL @ Jun 18, 2009 17:46:23 PM
Ernest Frishman of SC @ Jun 18, 2009 16:07:14 PM
John Kirby of MN @ Jun 18, 2009 14:51:04 PM
Jesse Slome, American Association for Long-Term Care Insurance of CA @ Jun 11, 2009 11:53:23 AM
David Shulman, CLTC of NY @ Jun 11, 2009 10:47:11 AM
Muser of NM @ Jun 10, 2009 13:50:20 PM
Geoff George of MA @ Jun 10, 2009 12:29:46 PM
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