Ask questions. If you have questions about the agent, the insurance company or the policy, contact your state insurance department or insurance counseling program. (A directory starts on pagev56.) Make sure the company is reputable and is licensed to sell long term care insurance policies in your state.
Check with several companies and agents. Contacting several companies (and agents) before you buy is wise. Be sure to compare benefits, the types of facilities you have to be in to get coverage, the limits on your coverage, what’s excluded, and, of course, the premium. (Policies that have the same coverage and benefits may not cost the same.)
Check out the companies’ rate increase histories. Ask companies about their rate increase histories and whether they have increased the rates on the long term care insurance policies that they sell. Ask to see a company’s personal worksheet that includes this information. Some state insurance commissioners annually prepare a consumer rate guide for long term care insurance. These guides may include an overview of long-term care insurance, a list of companies selling long term care insurance in your state, the types of benefits and policies you can buy (both as an individual and as a member of a group), and a rate history of each company that sells long-term care insurance in your state. Some guides even include examples of different coverage types and combinations and provide rates to assist consumers in comparing policies.
Contact your state insurancedepartment or insurance counseling program for this information. A list of insurance departments and counseling programs starts on page 56.
Take your time and compare outlines of coverage. Never let anyone pressure or scare you into making a quick decision. Don’t buy a policy the first time you see an agent. Ask for an outline of coverage. It outlines the policy’s benefits and points out important features. Compare outlines of coverage for several policies, and make sure the outlines are similar (if not the same) when comparing premiums. In most states the agent must leave an outline of coverage when he or she first contacts you.
Understand the policies. Make sure you know what the policy covers and what it doesn’t. If you have any questions, call the insurance company before you buy. If you receive any information that confuses you or is different from the information in the company literature, don’t hesitate to call or write the company to ask your questions. Don’t trust any sales presentation or literature that claims you have only one chance to buy a policy.
Some companies sell their policies through agents, and others may sell their policies through the mail, skipping agents entirely. No matter how you buy your policy, check with the company if you don’t understand how the policy works. Talk about the policy with a friend or relative. You may also want to contact your< state insurance department or insurance counseling program. A list of insurance departments and counseling programs starts on page 56.
Don’t be misled by advertising. Most celebrity endorsers are professional actors paid to advertise. They are not insurance experts. Medicare does not endorse or sell long-term care insurance policies. Be wary of any advertising that suggests Medicare is involved. Don’t trust cards you get in the mail that look like official government documents until you check with the government agency identified on the card. Insurance companies or agents trying to find buyers may have sent them. Be careful if anyone asks you questions over the telephone about Medicare or your insurance. They may sell any information you give to long term care insurance marketers, who might call you, come to your home or try to sell you insurance by mail.
Don’t buy more coverage than you need. You don’t have to buy more than one policy to get enough coverage. One good policy is enough. Also, don’t buy more insurance than you need. For example, buying a policy with a $500 daily benefit in order to prepare for inflation is not necessary. You should choose the daily benefit that matches the cost of long-term care. For more information, reread the section “If You Already Own a Policy, Should You Switch Plans or Upgrade the Coverage You Have Now?” on page 30. Be sure to discuss any change in your coverage with your financial advisor.
Be sure you accurately complete your application. Don’t be misled by long term care insurance marketers who say your medical history isn’t important—it is! Give correct information. If an agent fills out the application for you, don’t sign it until you have read it. Make sure that all of the medical information is accurate and complete. If it isn’t and the company used that information to decide whether to insure you, it can refuse to pay your claims and can even cancel your policy.
Never pay in cash. Use a check or an electronic bank draft made payable to the insurance company.
Be sure to get the name, address, and telephone number of the agent and the company Get a local or toll-free number for both the agent and the company.
If you don’t get your policy within 60 days, contact the company or agent. You have a right to expect prompt delivery of your policy. When you get it, keep it somewhere you can easily find it. Tell a trusted friend or relative where it is.
Be sure you look at your policy during the free-look period. If you decide you don’t want the policy soon after you bought it, you can cancel it and get your money back. You must tell the company you don’t want the policy within a certain number of days after you get it. How many days you have depends on the “free-look” period. In some states the insurance company must tell you about the freelook period on the cover page of the policy. In most states you have 30 days to cancel, but in some you have less time. Check with your state insurance department to find\out how long the free-look period is in your state. If you want to cancel:
- Keep the envelope the policy was mailed in. Or ask the agent for a signed delivery receipt when he or she hands you the policy.
- Send the policy to the insurance company along with a short letter asking for a refund.
- Send both the policy and the letter by certified mail. Keep the mailing receipt.
- Keep a copy of all letters.
It usually takes four to six weeks to get your refund.
Read the policy again and make sure it gives you the coverage you want. Check the policy to see if the benefits and the premiums are what you expected. If you have any questions, call the agent or company right away. Also, reread the application you signed. It is part of the policy. If it’s not filled out correctly, contact the agent or company right away. You may want to fill out Worksheet 3 on page 49.
Think about having the premium automatically taken out of your bank account. Automatic withdrawal may mean that you won’t lose your coverage if an illness makes you forget to pay your premium. If you decide not to renew your policy, be sure you tell the bank to stop the automatic withdrawals. Check on the financial stability of the company you’re thinking about buying from.
Several insurer rating services analyze the financial strength of insurance companies. The ratings can show you how some analysts see the financial health of individual insurance companies. Different rating services use different rating scales. Be sure to find out how the agency labels its highest ratings and the meaning of the ratings for the companies you are considering. You can get ratings from some insurer rating services for free at most public libraries. Or you can call the services directly at the numbers listed below. (Note that calls to a “900” number will mean an extra charge on your telephone bill.) And now you can get information from these services on the Internet.
NEXT: Rating Agencies