Look Before You Leap Into The Long Term Care Insurance Pool

DiveWhen I was a kid I was taught to “Look Before You Leap.”  My elders were trying to teach me not to dive off a pier without first looking to see if there were any hazards under the surface of the water that could injure me.

It is also a warning that people should consider the consequences before they do anything.

This week I want to share some questions that people should ask themselves before they commit to a Long Term Care insurance policy.  If you will answer these questions truthfully, you can avoid many problems in the future.


Not all insurance companies are the same.  Often, the only thing they have in common is your state Department of Insurance.  That is the regulatory body of government that authorizes insurance companies to operate in your state and makes certain that each insurance company abides by the terms that are in your contract with them.

However, there is no standard language for Long Term Care insurance like there is for Medigap.  Each insurance company is allowed to write their policies like as they desire.  This flexibility creates differences between insurance companies.

Again, contrary to popular thought, your state’s Department of Insurance is not a consumer advocate.  Neither are they going to side with big insurance companies in every dispute.

The job of your state Department of Insurance is to remain neutral and verify that both parties have lived up to their contractual responsibilities.

If you do not do what you are supposed to do, there is not much that your state Department of Insurance can do to you, the citizen, other than to allow your insurance company to continue to deny your claim.

It is a different story if you have done everything you are supposed to do and the insurance company is still denying your claim.  If that happens, your state Department of Insurance has several options.

Most insurance companies take requests and orders from state Departments of Insurance very seriously.   They want to avoid fines, censures and revocation of their Certificate of Authorization (permission to sell insurance in your state.)

Sadly, there are con-men and shyster who prey on the older generation.  With the advances in computer technology and color printers, it is easy for any jerk to print up false marketing and policy paperwork.  They can make an “insurance company” look legitimate when in fact it is nothing more than a myth.

They are more than happy to collect your premium for several years but conveniently be out of business when you have a claim.

Before you commit to any insurance company that you do not recognize, do some research on your own.  If nothing else, contact your state Department of Insurance and make certain that they are authorized to do business in your state.

Some state Departments of Insurance, like the one I live in, Texas, will provide you with company information on their website.  Here in Texas, you can learn a great deal about any insurance company you are considering with just a computer and internet connection.

If you live in a state that does not provide that type of information on their website, take the time to call you state Department of Insurance if an insurance agent tries to sell you a LTCI policy from an insurance company you have never heard of.

It is very possible that the insurance company is legitimate.  There are hundreds of insurance companies.  I have learned never to say that an insurance company does not exist until after I have verified its existence with my state department of insurance.  And I have been working with insurance for over 25 years.

When someone asks me about a smaller insurance company, I typically say, “It is not a company with which I am contracted but I will check on it for you.”

The idea that I am looking to communicate with this point is that you should not blindly follow the advice of an insurance agent when you are choosing which company to use for your Long Term Care insurance.

Save yourself from future frustration.  Take the time to make certain that the insurance company you use has a legitimate right to conduct the business of insurance in your state.


There are many ways to use LTCI.  Some people want to protect themselves from the high costs of a nursing home.  Others want to be able to hire a home care aide in the future.  Still others want to rely on members of their family to care for them but be able to reimburse them for their time away from work or pay their expenses.

LTCI can be used to do all of those things, and more.  However, it does require you to plan ahead.

A couple of months ago I was asked by a man who lived in the south why his LTCI policy would not pay to reimburse his child’s airline ticket to come and take care of him from Minnesota.

How do you tell a man in his 70s that the LTCI policy that he bought in his 50s is the wrong type for him?  Since he is already “on claim,” it is too late to make adjustments.

When he purchased his policy, he purchased an “Indemnity” type of policy.  That type of policy is excellent but limited.  It will only pay for items that are within the scope of his written plan of coverage.

With a little planning on his part, he could have gotten a LTCI policy with a “Cash” benefit.  Those plans pay a lump-sum of cash that the insured can use in any way he/she sees fit.  That includes reimbursing family members for travel and time away from work.

This man made 2 mistakes with his LTCI planning.

  1. He did not make adjustments to his LTCI portfolio when the children moved away.
  2. He did not upgrade his LTCI policy over the years.  (A few weeks ago I wrote, “Should I Review My Insurance Portfolio.”  I encourage you to read that post.)



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