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When you are shopping for long-term care insurance you will find that there are a lot of policies to choose from. Generally speaking, most long-term care insurance policies include similar standard features. Most of the standard features that you will find in the policies that you look at are required by the National Association of Insurance Commissioners. In the next section, we will discuss the benefit choices you have.
Types of Policies
There are three main types of policies: Comprehensive, Nursing Home Only, and Home Care Only. Not all insurance carriers offer all three. Some insurance carriers have eliminated Nursing Home Only and Home Care Only policies in favor of just offering Comprehensive policies. Most long-term care insurance policies offered today are "reimbursement" type contracts where benefits are paid only for expenses that are incurred, up to a pre-determined benefit amount. Indemnity contracts typically pay the entire pre-determined benefit on a daily or monthly basis.
The following types of care are standard features found in most comprehensive long-term care insurance policies:
- Nursing Home Facilities
- Assisted Living Facilities (aka: Residential Care Facilities)
- Home Health Care
- Adult daycare
- Respite care
- Care coordination
Discounts Available
If you are in excellent health, or buying a policy as a married couple, discounts offered by some carriers can cut your premiums from 10-30%. Carriers use different methods to determine who qualifies for a preferred rate. Spousal discounts may be available as well. Some carriers will offer the discount to the insurable spouse, even if the other spouse is declined. Some carriers also offer discounts for multi-lives or employer-sponsored discounts.
Not only should you be researching and picking a policy that best fits your needs, you should look at the insurance carrier underwriting the policy. There are four major areas to look at when choosing a carrier.
- Underwriting philosophy of the carrier:
The best carriers are the ones that are responsible with the risk that they insure. If a carrier is insuring people that most carriers would decline, it is possible they would be more likely to have to raise rates in the future.
- Pricing of LTC Policies:
Beware of carriers that price their policies "below market price". In other words, their price is far less than the average the other major carriers are charging. If a carrier does this, it is possible that they will need rate increases in the future to pay their claims.
- Experience in the LTC Insurance market:
The best carriers are the ones that are often the largest, have the most policyholders, and have been selling long-term care insurance for a considerable period. These carriers are more likely to have a claim-paying track record.
- Financial strength of the carrier:
It is wise to check out the financial strength and claims paying abilities from several rating agencies. Below is a list of the five main rating agencies with telephone numbers and links to their websites.
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