The Insurance Buying Guide: Applying for LTC Insurance
When an insurance company is considering your application for long-term care insurance, it will look at many of the same factors it considers when reviewing a health insurance application. The process of considering these factors is referred to as underwriting. Generally, health insurance underwriting is concerned with the following:
- the probability of a sickness;
- high-risk avocations or occupations;
- health history and current physical condition; and
- certain moral or ethical considerations.
LTC underwriting is concerned with the same factors, but the emphasis may be different. For example, if you apply for major medical insurance and indicate a mild heart condition, the underwriter has to be concerned about the possibility of having to pay for open-heart surgery.
If you are applying for LTC insurance, this heart condition takes on a different significance. Since the policy will not pay for surgery or hospital stays, the underwriter now must view the potential heart problem in terms of how likely it is to result in a prolonged confinement in a nursing home. Accordingly, the heart condition could cause the underwriter to decline the individual for a major medical policy, but the underwriter might accept the same person for LTC insurance.
The underwriter must follow the underwriting guidelines established by the insurance company. For example, some companies have established minimum and maximum issue ages for long-term care insurance. And some companies do not issue LTC policies to substandard risks.
Probably the most important cog in the underwriting machinery is the agent. The agent is normally the only person who ever sees you personally. The agent is responsible for completing the application for insurance as accurately and thoroughly as possible. This may include asking more detailed questions than the ones on the application.
An insurance company also may use an inspection report to determine whether or not to issue you a policy. The purpose of such a report is generally to verify information contained on the application or to obtain additional information about a specific condition or possible problem that may have surfaced on the application. In accordance with the Fair Credit Reporting Act, if an investigative report is to be completed as part of the underwriting process, you must be notified.
Medical information is extremely important to the underwriter, too. Much of this information will be found on the application. Additional medical information may be obtained directly from your doctor, through the use of an Attending Physician's Statement and request for medical records. Occasionally, applicants for LTC insurance are required to take a paramedical exam. This is usually required for applicants age 80 and over.
Finally, a face-to-face interview may be conducted to establish cognitive abilities. It is increasingly common for insurance companies to ask applicants for LTC insurance to submit to an evaluation of cognitive reasoning abilities, since these problems usually do not show up in routine medical history files. Sometimes, a cognitive assessment is required only for applicants above age 75 or 80.
