Why Is It Important To Review Your Insurance Policy?


ConversationEarlier this week I spent a couple of hours working with some established clients.

I already knew that they understand how to use the insurance policies they have with me.  Unfortunately, the lady is caring for her 95 year-old mother.  They have not reviewed her mom’s Long Term Care insurance policy since the mother bought it in 1993.

On Monday I politely demanded that they dust of the actual policy and take a look at it.  They were amazed at what the difference between what the benefits that they are actually entitled to and what they have been claiming.

In this post I want to share some of the additional benefits that they could have been getting all along.  My hope is that it will encourage others to review their insurance policies more often.

INFLATION RIDER

The daughter understood that the policy the mom had gotten had a monthly benefit limit of $1600.  After I made them pull out the actual policy, we noticed that while the original application requested a monthly benefit of $1600.

In 1993, that amount of money would have been enough to pay for the best Long Term Care available in Texas.  However, costs have increased drastically in the last 20 years.

Although the $1600 benefit would have been sufficient to hire a home health aide for an entire month in 1993, in 2013 it is barely enough to hire an aide for 2 weeks.

Fortunately, when we looked at the policy we noticed that an inflation rider was attached to the policy.  It automatically increases the maximum plan benefit by 5% each year.

Although the daughter has just been submitting $1600 of claims to the insurance company and paying all of the other Long Term Care expenses out of the mother’s savings, it has been unnecessary.

The plan’s benefit has increased to over $4000 a month.  If the daughter pays attention to the other requirements of the policy, there is more than enough money to pay for all of the Long Term Care expenses that are required to allow her mother to live with her.

RESPITE BENEFIT

We found another benefit that she was not using because she did not know it existed.

Most Long Term Care insurance policies understand that the patient’s primary care giver is generally a friend or family member.  They are the one’s who are required to care for the elderly 24/7.  Home Care aides are typically only available for a few hours each week.

The Respite benefit allows a primary care provider to hire a professional to care for a loved one around the clock for a period of time.  In this case it provided 30 days of respite care.

That means that the daughter is allowed to hire a professional to watch her mother around the clock for a total of 30 days each year so that she is able to “get away from it all.”

When I was a kid, my pastor used to say that it was necessary for people to, “Come apart before they come apart.”

Obviously, he was talking about the necessity of working people to take the vacation time that their companies provide.  However, I believe that the principle is applicable to care givers as well.

I watched the stress and strain that my mother experienced when she had to care for my father with Huntington’s disease.  Later, I saw both a brother and sister-in-law experience the same thing when they had to care for my siblings with the same disorder.

An abnormally high number of care-givers experience deep depressions of their own.  The Respite benefit is designed to allow them to, “Come apart before they come apart.”  It is designed to allow them to take a vacation from the stressful responsibilities of being a care-giver.

Whether they travel over 100 miles to spend time on the beach or just veg-out in front of the TV, they get a break from their care-giving responsibilities and are able to “recharge their batteries” so they are better able to cope with the demands of an individual who is no longer able to function like they used to.

CARE COORDINATOR

Many Long Term Care insurance plans talk about a professional called a Care Coordinator.  Unfortunately, some do not.  Her mom’s policy is one of the ones that do not.  The daughter did not know that someone called a Care Coordinator even exists.

In addition to watching and caring for her mother, the daughter has taken on additional paper-work.  After the mother has gone to bed, rather than getting the rest that she needs while she can, the daughter has to do paper-work for the insurance company.

We discussed the fact that she could hire a Care Coordinator.  Professional Care Coordinators are not care providers.  They do not do provide nursing services that are often required for people on Long Term Care claims.

What they do is eliminate all the insurance company paper-work so that the family member is only responsible to provide actual care for a loved one.

Care Coordinators are familiar with what insurance companies require.  They coordinate communications between the insured, the insured’s medical team, professional care providers and the insurance company.

LESSONS LEARNED

Several years ago I heard, “Hindsight is always 20:20.”  That is a more acceptable way to say, “If I had only known…”

Before I was able to visit with these clients and force them to review the mother’s policy they were torn.  On one day they were ready to sue the insurance company.  On the next day, they were resigned to only $1600 of income each month to help with the mother’s Long Term Care expenses.

Now, they understand that if only they had taken the time to review the actual policy when the mom first needed care, they could have saved thousands of dollars.

Right before I left, the daughter became angry with the insurance agent that sold the policy to her mother back in 1993.  I had to explain that there are often reasons to be angry with insurance agents but this was not one of them.

When the policy was first issued, a copy of the contract was sent to the mother.  It spelled out what would be covered and what is required from her.  It is not the insurance agent’s fault that she filed the policy without reading it.

How does this apply to you?  Your insurance policy is actually a contract between you and the insurance company.   Your insurance agent’s responsibility is to facilitate you getting the contract.  However, once the contract is sent to you, your insurance agent has no more legal responsibilities.

If you later have a problem, you will need to take it up with your insurance company.  Just be aware that they will respond based on the terms that are in your contract.

Before you get angry and demand that they are at fault, take the time to review your contract.

Many people do not understand that the reason they get a policy, in the first place, is so they know what is and is not covered and what is required from them before they are eligible for benefits.

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