Archive for June, 2015

Eight Places to Buy Long Term Care Insurance…Where Can You Get the Best Deal?

June 12, 2015

Long Term care insurance can be purchased from a variety of sources.  This gives rise to the question, where is the best place to buy it?

There are two absolutes about the cost of long term care insurance:

Absolute Number 1: The price is the same no matter where you buy it.  Long term care insurance is highly regulated, arguably more than any other form of insurance.  Insurance companies file their policy rates, state departments of insurance approve rates (often after adjustment), and that is that.  The same policy, issued by the same insurance company, for the same person, will cost exactly the same no matter where (or from whom) it is purchased.  It is illegal for any insurance company or producer (a generic term that included both brokers and agents) to deviate from the approved rates.

Absolute Number 2: Long term care insurance is the worst way to spend your money…until you start receiving benefits, when it becomes the best (I had to throw this in.).

 

Long term care insurance sources:

1. Online search: A good place to learn about long term care and long term care insurance, but not a good place to buy.  The problem is you do not know the person who is encouraging you to purchase insurance.  And he/she knows nothing about your needs and wants.  The decision to buy long term care insurance is a personal one.  The internet is very impersonal.  You have no idea of who is behind the website address.

2. Direct mail solicitation: A single company’s policy is being marketed, with a limited choice of benefit levels.  “One size fits all”, except that it doesn’t.  There are major differences among insurance companies in pricing, policy benefits, reputation for hassle-free payment of claims and so on.  Whomever is behind the solicitation knows nothing about you (other than what was on their mailing list), yet is recommending that not only that you buy long term care insurance, but that you buy it from the one company that is being represented.  If the mailing is from one of your associations, the “tug on the heartstrings” is because the association gets paid in exchange for its endorsement.  I know…I get these in the mail all the time at my home.

3. Other advertisements asking you to email or call in.  Examples would be magazine or TV ads: As with Direct Mail Solicitation, whomever is paying for the ad knows nothing about you.  Actually, they know even less than nothing because they did not even have a mailing list to work from.

4. Agent of a particular insurance company: Could possibly result in you applying for the policy that best fits your needs…if you are lucky.  The problem again, is that only one insurance company is being presented.  Yes, the agent will tell you that he or she is permitted to offer other company’s policies if another one is a better fit.  But they never do.  Agents of a particular insurance company are trained to sell that company’s policies…and are rewarded for doing so.  A case of “If all I have is a hammer, then everything looks like a nail.”

5. Stock broker: Not a good choice.  Could be knowledgeable about stocks and bonds but not so much about long term care.

6. Independent broker, providing a variety of types of insurance and perhaps investments as well:  We are getting closer.  At least they have sold different kinds of insurance.  May or may not have sold a few long term care insurance policies.

7. Financial planner/wealth manager: Is concerned about developing a comprehensive financial plan.  Often recognizes the necessity of including long term care insurance in a protection portfolio, but does not have the specific experience needed to recommend the best policy.

8. Independent insurance broker who specializes in Long Term Care:  In my not-so-humble opinion, this is where you will receive the best advice regarding a) whether or not long term care insurance makes financial sense in your individual situation, b) whether or not you can qualify medically, c) the policy design and insurance company that will best meet your needs and budget.  Working with a specialist has both advantages and disadvantages.  The disadvantage is that the true specialist will only help you with your planning for long term care…although experience in other areas can help integrate your plan for long term care into your more comprehensive financial planning.  The advantage is that a good specialist will know the subtle differences that will have a large impact when you file a claim.

What you should look for in anyone you would buy long term care insurance from:

  1. Integrity:  You must look the person in the eye (second best — listen on the phone).  Then rely on your intuition.

  2. Asks questions about you: The insurance producer must know about your medical history, your financial situation, and what is important to you.  How else can someone recommend a particular policy that will meet your own needs, wants, and budget?

  3. Experience: Long term care insurance is complicated.  Anyone who has it for only a few years cannot know enough to help you.

  4. Number of insurance companies: Must offer policies from at least 3-4 insurance companies.  While there a number of good companies offering long term care insurance, there is no single best for everyone.

  5. Personally owns long term care insurance: Nothing special if the answer is “yes”, but a huge red flag if the person telling you to buy does not own this insurance him/herself.

  6. Credentials: Specific to long term care are CLTC (Certified in Long Term Care) and LTCP (Long Term Care Professional).  As a minimum, anyone who is serious about long term care will have one of these.  Academic degrees and other insurance/financial planning designations can be helpful, but CLTC or LTCP tells you that someone is a serious student of long term care.

 

 

 

Disclaimer: This eNewsletter and all links to other sources should not be construed as tax or legal advice because they are neither. Raymond Smith, The Long Term Care Specialist, does not give legal or tax advice. Consult your attorney or tax advisor for these matters.

 

© Raymond Smith, The Long Term Care Specialist, 2015