Things to Consider When Purchasing LTCI
Making the decision to purchase and invest in long term care insurance can be a complex choice with many options and issues to consider. Not all long term care policies have the same provisions and options, nor does everyone have the same financial means. Finally, not everyone is the same age, nor does everyone have the same health issues or concerns when exploring long term care insurance. Because of this we have provided some information as provided by the State of Florida’s Department of Financial Services. Additional information can be found on their website.
Can you qualify for a LTC policy?
Companies selling long-term care insurance underwrite their coverage. This means that you may have to answer a few questions about your health for the “short-form” underwriting process. The company may also collect a more detailed health history for an extensive underwriting process. The detailed underwriting procedure includes an examination of your current medical records and a statement from your doctor regarding your health. If you have minor health problems, most companies will issue you a policy. However, there will be a waiting period for most pre-existing conditions. A pre-existing condition refers to a case in which medical advice or treatment was needed, recommended by or received from a health care provider within six months before the date the insured person’s coverage took effect.
How are premiums determined?
Premiums for long-term care insurance vary, usually depending on your age when you buy the policy, your health, the benefits provided, the length of the elimination period and any additional options you choose. These variables are outlined below:
Age - Each company sets the age limits that determine the cost. Usually, the younger you are when you buy a policy, the lower the premium. All longterm care policies sold in Florida are “issue age,” which means that your premium amount does not increase because you get older, but instead continues to be based on your age when you first bought the policy. However, the premiums of “attained age” policies do increase as you age.
Health condition - Companies may set health underwriting criteria. Your general state of health may be determined by filling out an application. It is very important to state facts correctly and to not omit anything. Any omission can result in your policy being cancelled.
Benefits - Know what your policy will pay and the length of time you will be covered. Generally, when the policy pays more benefits, either through a larger daily benefit amount or a longer benefit period, the policy will have more expensive premiums.
Elimination period - The elimination period is the number of days you must be in a nursing home or receive a lower level of care before you begin receiving benefits from your policy. Usually, the longer the elimination period, the lower the premium.
Additional options - Additional options include “inflation-protection,” “non-forfeiture” and “premium-waiver” benefits. Your premium costs may increase after you purchase your policy, but they must increase for all people with the same policy in the state. This means that you cannot be singled out for a premium increase if you develop an illness or medical condition. Before you buy a policy, know the average cost of nursing homes in your area. This can help you better determine the amount of benefits you need.