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What To Look For When Purchasing A Long Term Care Insurance Policy

The Insurance Company's Financial Status And Claims Reputation/Service

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Look for an insurer that:

  • Is financially stable so it will be here to pay your claim if you have one. If the company isn't around when you have a claim, all your premium payments will have been a waste. Look for companies with at least an A rating. To find an insurer's ratings, contact at least one of the following rating bureaus. Preferably check more than one to compare what different analysts say.
  • Evaluates ("Underwrites") up front whether you are physically and mentally fit enough to obtain a Long Term Care Insurance policy. If you deal with a company that evaluates whether the policy should have been issued at a later date, you may find yourself without coverage just at the time when you need it.
  • Does not have an unreasonable amount of complaints against it.
    • Particularly look for complaints about price hikes or not paying claims. To learn about an insurer's history, contact your state's insurance department. (For contact information, see offsite link)
    • Check with independent insurance brokers about the company's claims reputation.
  • Has a reasonable history of rate increases for Long Term Care Insurance policies. A history of rate increases does not necessarily indicate the company will make similar increases in the future. Even if a company promises not to raise rates because of age or health problems, it can raise them for other reasons.  Likewise, a few past increases does not mean the company will not impose an increase in the future. However, history in this case at least gives you an idea about the company and the way it prices its products. You can learn about an insurance company's pricing history by contacting your state insurance department. You can also ask the company. (If you ask the company, it is advisable to get the answer in writing).
    • Note that some companies offer a "10-pay" policy. These policies only require 10 annual premium payments. Then the policy is paid up for the rest of your life so rate increases are not a concern. As you might expect, the premiums are higher during the 10 years. However, at the end, you no longer have to pay premiums to keep the coverage.
  • Provides assistance in the event of a claim. The paperwork has been known to be a major problem for families. For instance, ask wehther the company will accept direct billing from an an agency which provides home care, an assisted living facility and/or a nursing home. Some companies provide "care coordinators" who can answer questions about claims, initiate paperwork and help you through the claims process.

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