Alternatives to Long-Term Care Insurance
Tips for Finding & Meeting with your Long-Term Care Insurance Agent
Chances are good that you will require some form of long-term care later in life, and deciding how you will pay for such care is an important step in planning for retirement. In our “LTC Insurance Step-By-Step” series, we covered the generalized process of purchasing a long-term care insurance policy and gave tips for researching and vetting insurance companies. But even once you are familiar with the overall process, the expensive and complicated nature of long-term care insurance can make finding an agent and purchasing a policy an intimidating prospect. To help better prepare you to take that step, here we take a more in-depth look at two of important aspects of the buying process – finding the right agent to work with and knowing what to ask when you meet with them.
Finding the Right Agent
Long-term care insurance is a complicated subject and a major investment. Because of this, you want to make sure that you have found the best agent for the job before going through with a purchase. Look for independent agents and check with your state insurance department to make sure that they are properly licensed. You will also want to double-check that any agent you are considering has received additional training in long-term care insurance. Some states require agents to receive this kind of training in order to be licensed to sell LTC insurance, but not all do. And of course, the more experienced an agent you can find, the better.
Another key thing to look for when vetting long-term care insurance agents is how many companies they are appointed with. You should aim to work with an agent who sells products from at least three different insurance carriers. Most experienced and knowledgeable LTC insurance specialists are appointed with five or six. You do not want to purchase a policy from someone who is only offering policies from a single company, as they will naturally lobby very hard for that company and may steer you towards a policy that is not ideal for your situation and budget. Keep in mind that vetting insurance companies themselves is an important step too, so if you haven’t already done so when you first meet with an agent, be sure to set some time aside for this research after you know what companies they are appointed with.
Important Questions to Ask
Before meeting with your agent, take some time to research the subject of long-term care insurance thoroughly and familiarize yourself with how LTC policies work and what to keep in mind when choosing and purchasing one. We have several articles that can help with this, including our "LTC Insurance Step-by-Step" series and others on topics such as the services covered by an LTC policy and the benefits and drawbacks of purchasing one. Below are some specific subjects to bring up when meeting with your long-term care insurance agent.
First, be sure to ask what kinds of long-term care insurance discounts you may qualify for. There are a variety of discounts available and many people will qualify for at least one. Examples include discounts for applying with your spouse and for having good health. Taking advantage of discounts like these can save you substantial amounts of money on your policy. If you want to familiarize yourself with the full range of discounts available, as well as other information regarding long-term care insurance policies, the American Association for Long-Term Care Insurance has some great consumer guides available here:
Another important question to ask is when the policies you are considering were first approved for sale in your state. Most large-scale LTC insurance providers will issue new versions of their policies every few years. As discussed in our other articles, rising costs are a major concern with long-term care insurance. Because of this, while older policies might seem appealing because they cost less now, the insurance company will likely update them in the near future and bump up the cost when they do. This could lead to a sudden increase in premiums once the update goes into effect.
You should also inquire about the impact that any preexisting conditions or prescription medications will have in terms of eligibility and cost. You want to be upfront with your agent about things like this because tempting as it may be, omitting details such as these is not a good idea. Why? If you don’t tell the insurance company about your condition, they may refuse to pay for the care it requires later on.
When tackling the subject of conditions and medications, some agents will try to brush it aside by saying something like “let’s finish the application and see”. Do not settle for this, as it could lead to unexpected extra costs if your condition or medication does turn out to be a problem. While different insurance companies have different rules regarding what is and is not allowed, an experienced long-term care insurance agent should have a solid grasp on what is and is not acceptable under the policies they sell. And if worse comes to worst, in most cases you will have a 30-day window to review your policy after you’ve signed, during which you can choose to return it for a full refund.
Finally, do not let yourself be scammed by dishonest insurance salesmen! While rare, such things do happen from time to time, and it pays to be cautious. Never pay an insurance premium in cash, and always make checks payable to the company that issued your policy and not an individual person working at or with that company.
Purchasing a long-term care insurance policy is a big investment, and the nitty-gritty of LTC insurance can be confusing at times. However, preparing for the likelihood that you will need long-term care in the future is an important component of any good retirement plan. To find additional information on long-term care insurance to help better prepare you for a meeting with your agent, take a look at our other articles.
More Useful Links:
Long-Term Care Insurance Companies