Applying for Long Term Care Insurance
I never thought that I would be able to give any advice about insurance, but after working for a Long Term Care Insurance broker for several years, I’ve learned a few tips that applicants should know before applying. Long Term Care Insurance is basically nursing home insurance. It pays for care if you need to enter a long term care facility due to age or health issues. Nursing home costs can be extravagant and will eat away at your savings so Long Term Care Insurance will help protect your assets if you need to spend a significant amount of time in a nursing home. I’m not a licensed agent so I can’t offer any product advice, but below are some things that I do know about the underwriting process and overall ins and outs when applying for Long Term Care Insurance.
1. Make sure you can afford it.
LTC insurance premiums can be very high. After you get a general idea of how much your premiums will cost, factor it into your budget to make sure you can afford it. This is an important section in the application, and you need to be truthful about how much you can spend on a policy.
2. Discuss the decision with your family and friends.
Many people cancel in the middle of applying for LTC insurance after speaking with family and friends. Their children assure them that they will take care of them or their friends tell them it’s not necessary. Make sure that everyone whose opinions you value are okay with your decision before you apply. That way you can go through the process confidently and will be willing to see it through to the end.
3. Research the average cost for a decent nursing home in your state.
This will give you a good idea about how much coverage to buy. Your insurance agent should have literature detailing the current rates. These guides often calculate the cost per day, and when you apply for a policy, you decide how much of this daily fee your policy will cover. Research the cost of some good nursing homes in your area and find out how much you’re going to pay to stay there each day. It's difficult to determine what the rates will be when you need care, but your policy will adjust for inflation the longer you have it, and getting a feel for what it will cost for care now will give you an idea of what you will be paying later.
4. Go to the doctor.
Most companies want a few years of medical records from your doctor (or sometimes multiple doctors if you have a complicated health history). If you haven’t been to the doctor in the last year or so, it’s a good idea to make an appointment so that the underwriters are reviewing your most recent health history. Make sure that you disclose the names and contact information of every doctor you have seen in the past three to five years either on your application or during your interview so that the insurance company doesn't have to go on a wild goose chase to track down all of your medical records. This can contribute to a long underwriting process and prolong the process of obtaining a policy.
5. Be prepared to have a nurse come to your house.
Not every company will make every applicant do this, but it is becoming more and more common. Originally, most interviews were done over the phone. A nurse would go over your health history and give you a cognitive test to make sure that your mind is sharp and that you don’t have any early signs of dementia (which is responsible for many LTC insurance claims). Now, many companies opt for a paramed exam. In a paramed exam, a nurse comes to your house to perform the exam, checking out your living environment, studying your motor skills and just making sure you are in generally good health. Many of these exams require a blood and urine sample (sometimes the urine samples are spread out over two or three visits) so be willing and prepared for this as well. You will schedule these exams with a vendor hired by the insurance company ahead of time so a nurse isn't going to ring your doorbell unannounced.
6. Be proactive in obtaining interviews and medical records.
Long Term Care insurance companies want you to be in good health when you apply. In order to determine this, they have underwriters review your interview/exam with a nurse and oftentimes obtain medical records from your doctor(s). Medical records can be especially tricky to obtain. Some doctors require a separate authorization to sign before they release your chart to the insurance company’s vendors. Other doctor’s offices use special copy services to copy records which can really take time. See if you can help in any way by making sure you sign and return any extra forms in a timely manner, call your doctor’s office if they are taking a long time in processing your medical records, and schedule your nurse interview/paramed exam as soon as possible. The sooner your requirements come in, the sooner they can be reviewed and your policy approved.
Look for Discounts
7. Determine if your alumni and other groups offer discounts or if your life or annuity company offers Long Term Care Insurance.
Many companies offer a loyalty discount for clients who already have another type of insurance product with their company (ex. life insurance). The broker that I work for offers a 5% discount to certain alumni members and other professional groups if they apply with certain companies. There are no LTC coupons in your weekly mail so it’s important to find discounts where you can.
8. Look into hybrid products.
If you have a large chunk of money to invest in a policy, consider buying one that joins LTC Insurance with another type of insurance, like a life or annuity policy.
9. Prepare for rate increases.
As the cost of long term care goes up, LTC insurance rates will increase. However, the earlier you buy the insurance, the better your coverage will be. Your policy will increase in value as well so as long as you continue to afford it, it's worth it to keep it. The policy that you buy now will be better than the policies sold five years from now since costs will go up and you will grow older.
Review Your Policy
10. Make changes within the first 30 days of receiving your policy.
If you are approved for coverage and receive your policy in the mail, it is okay to make changes within the first 30 days of owning your policy. You can change riders to lower premiums, appeal for better coverage, or even change the spelling of name on your policy if you want (ex. adding your middle name or hyphenating a last name). Have your insurance agent submit a change form to the insurance company, and they will issue you a new policy or new policy pages to insert into your original policy booklet. You can do this before you even pay for the remainder of your policy.
11. If your spouse is declined, keep yours.
Sometimes a couple will apply for coverage at the same time, but only one of them will get approved. This will raise the premium of the insured’s coverage, but your insurance agent will tell you that this makes it even more important for that client to keep their policy. If the declined applicant’s health prevents them from obtaining coverage, the healthy person will need the insurance to make sure that they are covered if their health ever fails them. Many applicants can reapply if their health improves after a certain amount of time (ex. recovered from surgery, released from physical therapy, cancer free for a number of years, etc.). Also, any wrongful declines can be appealed with a doctor’s letter. So, declined applicants still have options as well.
12. Apply in your 50’s and 60’s.
Get coverage while you’re young, healthy, and your premiums are lower. You never know what the future will hold for you, and like any insurance, it’s best to get it before you need it, and if you never need it, that’s a good thing too.
Do you or anyone you know have a Long Term Care policy? Leave your responses in the comments below!