Long-Term Care Insurance - Two Questions to Ask Your Insurance Professional Before Buying

Wednesday, June 26, 2013

Yes, I want you to consider buying long-term care insurance. No, we don't sell long-term care insurance, so it doesn't matter who you buy from. But, after nearly 20 years in the long-term care insurance field, I have learned that there are smart questions to ask before you sign on the dotted line.

With that in mind, I would like to share those questions and some explanation why each can save you money ... get you better coverage ... or even a combination of the two.

Question 1. Do you have access to policies from more than one company (and how many have you compared for me)?

There are between 40 and 50 different insurance companies today offering long-term care insurance policies. Each sets their own rates and depending on your age, health, marital status there can be quite a variance. For example, the Association recently requested rates for a 55-year-old from four leading insurers (Genworth, John Hancock, New York Life and Northwestern Mutual). These are all excellent companies.

There was almost a $1,000 a year spread (we won't tell you who was the highest because they could be the lowest had we changed some of the circumstances). But, this demonstrates the importance of having your insurance agent get rates from multiple companies. If they only have access to long-term care insurance from one company, they can't compare on your behalf. So you should.

Question 2. Do you think I can qualify for "Preferred" health discounts with the company you are recommending? If not, is there another company that to me?

Just as there are significant differences between what insurers charge, there are important differences between what health conditions they will find acceptable. Keep in mind that NOT everyone who applies for long-term care insurance gets accepted.

A preferred health discount can generally save you 10% each year. The best news is that once you qualify, the discount is not changed when your health changes (and it typically will).

Most agents today will not quote a rate showing a preferred health discount. They don't want to come back and tell you that you'll be paying more for protection. But some will. It's important to ask whether the rate they are projecting includes that discount. Or, if it doesn't ask them whether they think you might qualify for that savings based on their experience (you're not only looking for that information ... but to get a general sense of how much they really know about long-term care insurance).

These are probably the two most important questions you can ask. If you are comfortable with the answers, they sign away. If you are not, then you might want to see a second opinion. About two thirds of buyers today actually speak to more than one insurance professional before buying long-term care insurance.