Three Keys to Compare Long Term Care Insurance Policies
Find out how to compare long term care insurance policies, and pick up a few long term care policy buying tips along the way.
When a new financial or insurance product is introduced, it can take several years before industry standards are set. Long term care insurance is one of those products. While it's been available for several years now, there are few standards that serve to define long term care insurance. As such, insurance companies have been introducing new long term care policies to their clients with varying features, making it hard for the average person to compare long term care insurance policies.
Here are three basic guidelines for long term care insurance comparison shopping:
1. Compare companies
There are so many companies who either offer their own long term care products or are entering into the market, that it may seem daunting to try and discern the good from the bad. In addition to speaking to a long term care specialist at BeamaLife, you can also research life insurance company ratings and customer reviews. Independent firms such as A.M. Best, Moody's, TheStreet.com, Standard and Poor's, and Fitch also offer unbiased analysis and opinions on an insurance company's ability to pay its claims. Your state's insurance department is an additional great source of information about companies, including the number of consumer complaints filed against them in recent years. It's obviously important to choose a firm that will be there and able to help you when you need them the most.
2. Compare long term care policy options
Once you've narrowed your choices to insurance companies in which you trust, you'll need to determine which long term care policy best meets your anticipated needs. Since there's no standard contract in the long term care industry just yet, it's important to know exactly what long term care policies cover – and what they leave out.
Review the sample long term care policies the companies provide you with, and make sure you understand all of their long term care policy provisions. Some of the most important ones include:
- Waiting Period – This is the amount of time that has to go by before an insurance company starts to pay claims. These periods vary from as short as the effective date of the policy to as long as one year later. The shorter the waiting period, the higher the premiums will be.
- Benefit Period – Once your claim for benefits begins, you'll receive those benefits only as long as the benefit period lasts. Some last for one or two years, while others can last your entire life.
- Daily Benefit Amount – This is the dollar amount the policy will pay towards your nursing home and home health care.
- Cost of Living Adjustment – This feature protects you against inflation. It automatically increases your benefit amounts so that you don't lose valuable coverage due to changes in the buying power of a dollar.
- Range of Care – A good policy should provide for all of the possible types of care you may need in the future. Those include skilled care, intermediate care, and custodial care.
- Pre-existing Conditions – Some policies impose a waiting period for claims made for a medical condition you had at the time the policy was issued. After the waiting period has expired, benefits are paid as normal.
- Other Exclusions – Some long term care policies exclude certain medical conditions, such as Alzheimer's or Parkinson's disease. Others may require that, in order to receive benefits, you must be in a specific type of care facility. Be sure you understand the nuances of these exclusions completely.
- Premium Increases – Some policies have the same premium for the duration of the policy, while others have premiums that could change during the policy period.
- Waiver of Premium – Most long term care policies allow you to stop paying premiums while you're receiving benefits from the policy. It's critical to understand when the waiver of premium period begins, and under what circumstances it can continue.
- Guaranteed Renewability – As long as your health does not change, most policies allow you to renew your coverage once the initial coverage period expires.
- Grace Period – Like other insurance policies, most long term care policies also give you a grace period, allowing you to make your premium payment slightly late if you miss a due date.
- Restoration of Benefits – If your long term care policy has limited lifetime benefits, each payment you receive reduces the amount you're eligible to collect in the future. A restoration of benefits provision makes it possible for your benefits to be restored to their original levels if you go for a specified period of time without any claims.
- Return of Premium – Some long term care policies will return a portion of your premiums to you if you cancel your policy after having paid your premiums regularly and remaining claim-free for a specified number of years.
- Prior Hospitalization – Some long term care policies will not pay benefits unless your illness of injury requires hospitalization for a period of time. Not too many company sell policies with this provision, but check for it anyway. It's a good idea to avoid this type of policy in general.
3. Compare long term care insurance rates
Considering the myriad of coverage options you may be offered from two different long term care policies, a simple comparison of long term insurance rates can tell you next to nothing about which is the better coverage policy for you. Your goal should be not to find the long term care insurance policy with the lowest premium, but to find the one that best meets both your present and potential needs. The cost of the coverage is just one part of making that determination. In general, premiums are based on the coverage options you select, along with your age, your medical history, the cost of medical care where you live, and a small number of other factors.
Want more information or a personalized quote? Call (877) 972-3262 to speak with an experienced specialist, who can help you compare long term care insurance policies. Or, complete our quote request form now.