While the idea of purchasing long term insurance is attractive, especially to baby boomers, sometimes it can be a target for fraud. See my article on Long Term Insurance to see how it works. Here are some some things to consider:
Read the Fine Print
One thing to remember is that long term insurance will NOT protect your savings. Many policies are very vague and flawed when it comes to the limitations of coverage; agents will not disclose that to potential customers. If they did, customers would not purchase them at all. Customers would have to purchase policies with very high benefits, making them unaffordable to most.
Get Inflation Protection
Before you purchase any policies, make sure it has inflation protection. Here’s why: The average cost of a nursing home in a major city is about $60,000/yr or more. If a consumer purchases a policy that pays a fixed $100 per day x 6% inflation rate, at 6% inflation the cost of nursing care will double every 12 years and the daily charge will be around $354. In twenty-four years the same nursing charge will have grown to $708 daily. So if a customer purchases a policy today at age 56 a long-term care with a fixed benefit of $100 per day and they require nursing-home care at age 80 , they will have to pay more than 85% of the costs out of their own pocket. Therefore, compounded inflation protection is your best bet. If the policy does not come with this feature, then it is not worth buying. Healthcare costs are skyrocketing and will continue as the population ages. Carriers will offer different kinds of compounded interest protection you can find out more it at the Consumer Law Page. It goes into more detail about the various features of a policy that are misleading to the consumer.
Tips to Consider
- Shop around – Just like you would with health insurance, or any kind of insurance.
- Take your Time – Study different coverages and compare.
- Study – Make sure you understand the policy and its limitations, benefits, and features. Make sure the agent gives you all the details you need and doesn’t hesitate when you ask pertinent questions. If they do, move on.
- Don’t fall for the hype – Just because you see someone famous endorsing the product, doesn’t mean it’s legit. NO federal agency or Medicare sells long term policies.
- One is enough – One policy is enough, don’t purchase multiple policies. They are not necessary
- Don’t skip out on your medical history – It’s important to be detailed about all of your conditions, if any. If necessary, refer the agent to your doctor who will have a more accurate account in their records.
- Don’t pay in cash: Always use another method where it’s trackable. Get any and all contact information.
- Buy from a stable company: There are different agencies that report the financial stability of various insurance companies. Consumer Law suggests Weiss Research Inc.
Long term insurance can be a very complicated process. Seniors who are alone, are most vulnerable because they are often times lonely and more influenced by those who promise them false hopes. So it’s best to be their guide while allowing them that independence.
More information about Long Term Care Insurance can be found at the Consumer Law Page.
