It hasn't really been the "Long Term Care Insurance Awareness Month" many had hoped for. A major carrier announced that it will end sales of the policies, and others have asked for significant rate increases. Instead of raising consumer awareness of the important policies, November has seen rising concern and confusion.
But while there's no doubt the long term care market is changing, consumers shouldn't let those changes scare them away. Do some research. Get the facts. And find out if long term care insurance is for you. If you're a middle-income couple looking forward to your golden years, long term care insurance probably should be part of your financial plan.
How can consumers educate themselves about long term care insurance? Jane Bryant Quinn's article "Long Term Care Insurance: 6 Ways to Buy It Right" is a good place to start. A summary of her tips:
- Buy group insurance, if your employer offers it.
- Be prepared for your policy’s premiums to rise.
- For individual coverage, choose a large, well-diversified insurance company, rated no lower than A.
- If a big insurer won’t take you, go for the small insurer anyway.
- Consider hybrid products.
- Cut the cost of a policy while still providing yourself with a reasonable safety net.
The careful consumer's next stop should be to seek the advice of a licensed insurance agent.
How to choose an agent:
- Consult relatives, friends and business associates for referrals.
- Look for an agent with specialized training in health insurance and other related subjects.
- Determine if the agent has any professional designations [i.e. Health Insurance Associate (HIA), Long Term Care Professional (LTCP), Registered Health Underwriter (RHU), etc.].
- Ask if the agent is a member of a professional association such as the National Association of Insurance and Financial Advisors (NAIFA). NAIFA’s members follow a Code of Ethics that includes adhering to “professional standards of conduct in helping my clients to protect insurable obligations and attain their financial security objectives.”
- Talk with the agent yourself to determine compatibility. There are many licensed agents, talk to several if necessary. You should be comfortable with the agent you choose.
Keep in mind that all agents are licensed and regulated by their state insurance departments and must carry proof of state licensing. If the agent cannot show proof, do not buy from that person. A business card is not a license.
Many agents belong to professional organizations such as NAIFA, which provide members with products and services to enhance their professional skills. Ask if your agent is a member of a professional organization.
The agent will be able to evaluate your current coverage or lack of coverage, and make specific recommendations that suit your needs and your budget. Ask for an outline of coverage, which summarizes the policy's benefits and highlights important features. Generally, it doesn't make sense to buy a policy primarily because it has the lowest price. Policy benefits vary among policies and it is often difficult to compare policies based solely on cost. Make sure you understand what the policy covers and what it does not.
If you have any questions, ask the agent before you buy. Questions later on, or need help filing a claim? Ask the agent, who is there to help you before and after the policy is purchased.
Using the internet as a research tool to learn more about insurance may be helpful. However, purchasing a policy online can be risky. Insurance policies are very complex and you will need a professional agent available to explain benefits, answer your questions, serve as your advocate or make specific recommendations based on your needs and budget. You can't get that from checking boxes and talking to someone at a call center.
These tips are useful for any type of insurance you may need. You can find a list of professional NAIFA member agents in your area is available at www.naifa.org/consumer/advisor.cfm.
The cost of long term care can wipe out a family's assets and leave a surviving spouse financially devastated. Get the facts about long term care insurance by talking to a professional insurance agent.