In previous posts, we've covered what long term care insurance does, when it can be a wise choice, where it can help pay for care, and when the best time to apply is. If you've done your homework and think a long term care policy is a smart option for you, here are some tips on how to shop for long term care insurance and apply for coverage.
Are you eligible for long term care insurance?
The state of your health affects whether you'll qualify for a policy. If you have a serious pre-existing condition like dementia or Parkinson's disease you will likely be denied coverage. To see a list of common conditions and reasons for insurance ineligibility, see our How to Qualify page.
Does your agent specialize in long term care policies?
Long term care insurers usually give you many options to choose from, like a choice of waiting periods, daily maximum benefits, inflation protection, and duration of coverage. Because of that complexity, it's important to work with an experienced agent to get what you need and stick to your budget. Ask your friends, colleagues, and financial advisor if they can recommend an agent, and visit our team page to find an agent licensed in your state.
What's the company's history of premium increases?
As health-care costs rise, so do premiums for long term care policies. According to the Texas Department of Insurance, your agent should let you know what the company's yearly rate increases have been for the past decade, to give you an idea of what you can expect in the years to come. Before you buy a policy, think about whether you can afford not only the current premiums but any future increases.
How are benefits paid?
Long term care policies may pay benefits in several ways, and it's important to know which way your insurer will handle payments before you sign on. According to the National Association for Insurance Commissioners, the usual options for long term care benefits are:
- Disability method, in which you get your maximum daily benefit when you're eligible, whether or not you're getting care.
- Indemnity method, in which you get a direct set-amount payment from your insurer when you're eligible and receiving covered services.
- Expense-incurred method (reimbursement), in which you or your care provider receives benefit payments for the exact amount charged (or your limit, if it's less) when you're eligible and receiving covered services.
NAIC says expense-incurred is the most common benefit payment method.
Where does the policy pay for care?
Most policies pay for care in a nursing home, assisted-living facility, and in your own home, as long as you're using a professional in-home care service. Make sure you understand which types of care are covered and for how long. It's also a good idea to ask about bed reservation benefits that can “hold your spot” in your nursing home or assisted living facility if you're ever away due to hospitalization.