Pitfalls of Long-term Care Insurance

The cost of long-term care is notoriously high and may put a family’s assets at threat. Long-term Care Insurance policyholders are free to design their own coverage according to their needs. By choosing the daily benefit amount, waiting period, benefit payment period, inflation protection and other coverage options a policyholder determines the premium cost and the level of coverage.
It is advisable to contact your insurance agent and request a document called Long-term Care Insurance Outline of Coverage. It contains information on terms, conditions and limitations of your insurance policy. Be very attentive to such details as health criteria, pre-existing condition waiting period, renewal, the length of the benefit period, rate increases etc.
Note that most insurers providing Long-term Care Insurance will only pay for certain types of conditions, and will exclude others. You can choose a longer waiting period and cut your premium, paying more out of pocket.
Be aware of the cancellation conditions of your insurance policy. You may choose to reduce your Long-term Insurance premium by shortening the benefit period. There are no universal standards of a long-term care facility, and this may be another pitfall. The definition of an “assisted-living facility” or “adult day-care center” varies from state to state and from policy to policy. For example, in case you purchase a policy in one state and retire to another state, you may fail to find the facilities in a new state which match the definition in your Long-term Care Insurance policy. You are also recommended to check whether the facilities fit the criteria stated in your insurance policy.
Long-term Care Insurance normally pays part of the daily cost of long-term nursing home or home health care. LTC policies cover facility charges for inpatient nursing home and skilled nursing care, and some may cover home health care and assisted living facilities. Beware of the policies which pay home care or custodial benefits only after skilled care has been given, policies which only cover skilled nursing care or only care from Medicare-certified nursing homes.
Another pitfall may be connected with the time of purchasing LTC insurance type. The younger a consumer is when he/she buys a policy, the lower his/her premium will be. Buying a Long-term Care Insurance policy before the age of 60 is reasonable only in case you have a chronic condition that is likely to disable you in time. The industry is rapidly changing, and the types of long-term care facilities defined in your insurance policy today might turn out outdated when time comes, and not match the types of facilities available for you to move into. Many consumers may be prone to buying benefits they don’t actually need. However, excessively low-priced policies are as undesirable as over-priced. Never sign a policy if you don’t understand something, even if this is just one section. Unless an insurance policy has language that specifically defines what it will offer, don’t base your purchasing decision on the benefit which can be misinterpreted.
Choose an insurance company with high ratings. Individuals qualify for Long-term Care Insurance benefits if they are unable to perform certain activities of daily living (bathing, eating, dressing, using a toilet, and walking). However, some policies make it difficult to qualify for benefits. Choose a policy that increases your chances to qualify, for example, the policy which requires inability to perform no more than two activities of daily living before paying benefits. Many companies offer spousal discounts if you and your spouse buy identical policies. Discounts may not be valid if you get different policies. Then, women tend to live longer and may have different long-term care needs.
If your family has a history of chronic or debilitating illnesses, which family members tend to suffer in their sixties, purchasing a Long-term Care Insurance could be the right decision. However, besides a number of options and benefits, Long-term Care Insurance may have some pitfalls. Long-term Care Insurance is often purchased by individuals who possess a substantial estate and don’t want to lose it to long-term care costs.