“If you buy it young, you might get a decent rate,” she said. “If you try to buy it later, you can be denied,” either for age or health reasons. “If you have any medical conditions, like cancer or high blood pressure, you can be denied coverage or charged exorbitant rates for premiums.”
Generally, it doesn’t make too much sense to buy a policy before your mid-50s, Reilly said. “It’s just years of additional premiums and most of us would not need long-term care in those younger years.” But, she said, you want to consider your family’s medical history, as well as your own health issues, and obtain a policy before you get a diagnosis that could eliminate you from consideration. “The older you get, the harder and more expensive it is to buy a policy.”
And be prepared to be quizzed before you buy a policy. Many insurers are more closely scrutinizing your medical history, even asking for cognitive tests, before agreeing to issue a policy.
Q: Where should you start?
A: Talk to a licensed insurance agent who has been certified to sell LTC policies. You want a company with a good track record and minimal number of rate increases.
Q: Does California have stricter controls over how LTC policies are sold?
A: “In California, because we’ve passed so many consumer protection laws, we have some of the highest standards in the nation for these (long-term care) products and for the agents who sell them,” said Burns.
Licensed insurance agents must have 16 hours of specialized training in the first two years of selling LTC policies. Consumers have 30 days after receiving a policy to review it; if they change their mind, they can return the policy and receive a full refund of any payments, with no questions asked.
Q: What if you’ve got an existing policy but get hit with a big rate increase?
A: If you get a letter about a rate increase, carefully review it, said Reilly. Some companies raise premiums at certain ages, like 65 or 70. Other companies re-evaluate their policies and raise premiums based on unexpected levels of claims.
When premiums hikes are significant, some insurers offer a one-time chance to convert to a “paid-up” policy, said Reilly. “Every dollar you’ve already paid in will be held in reserve until needed. You’re giving up the policy, but not losing the money, if you need the care,” she said.
But it’s not automatic. The offer comes in a letter, asking you to accept or decline. If you do nothing, the company presumes you’ve accepted the rate increase, she said.
Q: How cost-conscious should people be when buying these policies?
A: “It’s hard because these policies are expensive,” said Burns. “There’s no easy way to make an apples-to-apples comparison, so people tend to buy based on price. But if you buy a lower-priced policy, you might very well buy something that’s going to have a rate increase down the road.”
Although the state Department of Insurance and others offer online rate comparisons that will give you an approximate price for premiums, based on your age and type of coverage, exact policies vary from company to company. The older you are, the higher the premium.
Q: How should families be involved?
A: Involve your family members in what you decide to do, said Burns. “When you need the care, you won’t be the person dealing with the insurance company.” Several years ago, she had a case where a parent died and the estate went through probate. When the safe deposit box was finally opened, the family found a long-term care policy that no one had known about. The premiums hadn’t been paid so it had lapsed.
She recommends that consumers sign up for a “third-party notice,” so that if the premium lapses, you’ve named someone to be notified. It could be a relative, an adult child, an attorney or someone who could step in to be sure you don’t lose the coverage you may need.