Health Insurance Online
Phone Icon
Call now to speak with a Licensed agent (866) 954-1892

Insurance Type:

Taking Care of Mom and Dad: Shopping for LTC Insurance

If your parents need a long-term care policy, a good way to begin is to assemble information on the types of long-term care services and facilities they might use and find out how much each costs.

Shopping for LTC insurance can be difficult because the plans have not been standardized like Medigap policies. So, there's more pressure on your parents to read policies and compare the benefits they provide, the premiums they charge, the limitations and exclusions on coverage and the types of facilities covered.

A few common sense tips to give your parents:

  • Don't buy a policy on the first interview -- no matter how pushy the agent is.
  • If an agent can't provide a policy or, at least, an outline of coverage, find a new agent.
  • Always read over a form before you sign. If the agent fills out the form for you, read it carefully before you sign.
  • Don't sign a form with incorrect information on it and never sign a blank form.
  • Take your time reading through the policy or outline of coverage and ask questions. If the agent can't answer your questions, try the insurance company's home office.
  • Contact your state insurance department or state insurance counseling program if it has one.
  • Never pay an agent in cash. Write a check payable to the insurance company, write the policy number on the check and get a receipt.
  • Be sure you get the name, address and telephone number of both the agent and the insurance company.

Your parents should receive their executed policy within 30 to 60 days. When they do, advise them to put it in a safe place and tell someone they trust where it can be found when needed.

Your parents usually have 30 days after purchasing a long-term care policy to make sure it's the one they want. If they decide they don't want it, they can cancel it and get their money back. In order to do this, they will probably need to send the policy and a letter requesting a refund to the insurance company. And they should send this by certified mail, postmarked within 30 days of the purchase date.

The most restrictive LTC policies cover only skilled care (care ordered by a doctor and given by a registered or practical nurse). This limitation excludes the typical nursing home patient, who doesn't need constant medical attention, yet is unable to take care of himself.

More liberal policies require only that the policyholder be unable to perform certain activities of daily living -- eating, dressing or moving around -- before claims will be paid. But insurance companies can define these activities in a way that makes collecting difficult.

Make sure your parents' policy covers cognitive as well as physical impairments. Other tips to remember:

  • Try to buy a policy that covers care at home as well as in an institution. Home care coverage may allow your parents to stay out of a nursing home altogether.
  • Make sure the policy keeps up with inflation. Assume your dad is 60 and will go into a nursing home when he's 80. If costs climb at 7 percent a year, today's $50,000-a-year home will charge $195,000 a year when he needs it. A policy allowing for up to five percent a year in benefit escalation is typical -- though it may cost more each month.
  • Pay attention to the cancellation and termination language in the LTC policy. In some states, insurance companies may cancel at any time, thus robbing the policyholder of equity he thought he was building up with his premiums.
  • If your parents' policy is guaranteed renewable, their premiums can't be raised selectively. But their insurance company can raise rates across the board for all policyholders -- or for everyone in a single state or single age group.
  • Make sure your parents fill out the application completely and accurately. Otherwise, the insurance company may take their money for years, then decide after they enter a nursing home that they don't qualify for coverage -- because of some medical problem they failed to disclose.

Since long-term care policies haven't been around for very long, the insurance industry underwriting is being done on what amounts to speculation. Insurance companies are constantly improving on their LTC policies and, in many cases, lowering rates. Good ones let their policyholders gain from these improvements. When Massachusetts-based John Hancock introduced a new version of its nursing home insurance, it allowed all existing policyholders under age 80 to upgrade (with some limits), without evidence of health.

Google Plus One