Where to Purchase Long-Term Care Insurance
Most people will require some form of care or assistance later in life, and buying long-term care (LTC) insurance can help you prepare for when that time comes. LTC insurance policies are private policies that will help pay for at least some of the costs of in-home, assisted living, or nursing home care, and can cover services that Medicare, Medicaid, and employer-provided health insurance do not.
You can purchase long-term care insurance through an agent or directly from an insurance company. Most people purchase LTC insurance as an individual plan. However, there are other options out there that may be worth exploring.
In addition to individual plans, you can purchase joint plans that cover more than one person. Such a plan could be used to cover spouses or relatives. This can be beneficial in some situations, though it is important to keep in mind that there is usually a maximum amount of benefits available to everyone on the plan. This means that Person A could use up a disproportionately large amount of benefits and leave Person B with very little money to work with later on.
Group Plans from Employers or Organizations
Some employers offer group long-term care plans or individual plans that are available at discounted group rates. While you will usually be required to answer some medical questions, they often don’t include underwriting, so you may not have to meet any medical requirements to qualify (at least at first). This means that it could be easier to qualify for this kind of plan than it would be for an individual plan. In many cases, even if you stop working for that employer or they stop offering that benefit, you can still keep your policy or something similar so long as you continue paying the premiums. Some professional and service organizations also offer group-rate plans. If you are considering purchasing a group plan through your employer or an organization, check to see whether you will be able to keep it even if it stops being offered at some point in the future.
Being able to get a policy through work or an organization can be great, but there are several points to be aware of before you make a purchase. First, group plans may not be guaranteed renewable. This means that the plan could contain language that allows the insurance company to cancel it and replace it with a different plan, which could lead to an increase in premiums. The insurance company may also opt to just cancel the plan altogether. A group plan may not be tax-qualified, either. Tax qualified plans are required to meet certain federal standards and can offer certain tax-related advantages. If you are considering a group plan, take a close look and see whether it has or lacks these features. More information on tax-qualified plans can be found in our articles on the benefits of long-term care insurance and things to look out for when purchasing a policy.
Another potential difference between group plans and individual plans lies in their ADL requirements. Most individual plans require that you be unable to perform two activities of daily living (ADLs) in order to qualify for benefits. However, some group plans bump this requirement up to three ADLs, which means you’ll have to wait longer before you can start receiving benefits. Additionally, to compensate for the higher risk involved, group plans may have higher deductibles and lower benefits than individual plans. Because of this, even if you do have access to one of these group-rate plans, it’s a good idea to look around and compare quotes from other sources for the same amount of coverage just to make sure that you are getting the best deal possible.
Last but certainly not least, if you are purchasing a group-rate policy through a retirement system or organization, be aware that such organizations are not regulated by state insurance departments. This means that they could increase rates and make substantial changes to policies without having to get approval from the state.
Insurers offering LTC Policies
While more than 100 companies offered long-term care insurance policies back in the late 1990s, today the number has dropped to only about a dozen offering individual plans and even fewer offering group plans. Below is a list of the major insurers offering individual LTC plans today. While not a comprehensive list, these are the most well-known and trusted insurers with the most widely-available plans. Even so, not all of these companies will have policies available in every state. Ask your state insurance department for a list of the companies approved to sell LTC insurance policies in your state once you are ready to buy.
- Bankers Life & Casualty
- Genworth Financial
- Mutual of Omaha
- New York Life
- Northwestern Mutual Life
- State Farm
When it comes to choosing an insurance company to purchase your policy through, it pays to shop around. In a 2016 price comparison, the American Association for Long-Term Care Insurance found that rates could vary as much as 94% between different insurers. This massive discrepancy is the result of a few different things. First, every company sets its own rates, and each one designs things a little bit differently. For example, the company selling the best rate for someone buying LTC insurance at age 55 may not have good rates for someone buying at 65. Rates are also liable to change as companies modify or discontinue older plans and introduce new ones. It is recommended that you compare information and costs from at least three companies before reaching a final decision. When making your comparisons, look not only at cost but also at what kinds of features and riders are offered, how long the elimination periods are, how long the benefit periods are, and so forth. You can learn more about important features to look for or avoid in our articles “Notable Riders, Options, and Features for LTC Insurance Plans” and “Things to Look out for When Choosing a Policy”.
You should also take some time to examine the insurance companies themselves, checking their history in the LTC insurance market on websites such as Moody’s Investors Service, A.M. Best, and Standard and Poor’s. Things to research include the financial strength of the company (an important factor in assessing the company’s ability to pay out claims later on) and how often they have increased their premiums in the past.
Long-term care insurance is a big investment and something that should be undertaken with care. Consider reviewing your policy with an attorney or financial adviser before you buy, and never let anyone pressure you into making a rushed decision. To help you be better informed and more prepared to make a choice regarding LTC insurance, take a look at the other articles and resources available on this website, including our tips for those interested in long-term care insurance and our walkthrough of what happens after you have purchased a policy.
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