As your clients hear more and more about the importance of planning for long-term care and the role that long-term care insurance plays, they will probably have a wide range of questions. Here are some common questions about long-term care insurance (LTCI) you may encounter as well as some answers you can offer.
Read More: 5 Tips for a Successful Long-Term Care Insurance Sale
1. What Does Long-Term Care Insurance Cover?
Most LTCI policies are comprehensive in nature, covering in-home care, assisted living facilities, and nursing home care. Many policies also cover home modifications, care management, and hospice care.
2. When Can I Start Using LTCI Benefits?
Your client’s benefit trigger is the inability to perform at least two activities of daily living (ADLs), which include bathing, dressing, toileting, eating, transferring, and continence, for a period of at least 90 days; or a severe cognitive impairment. A physician or licensed care professional must certify their condition and how long they would need care. Additionally, your client’s elimination period or deductible must be met before benefits will be paid.
3. How Much LTCI Coverage Do I Need?
When determining the amount of coverage to purchase, consider your client’s health, family history, and financial obligations. Typically, women require more care than men because they live longer and are often alone in their later years. Even a small policy can help cover care costs when they need it.
4. How Much Does Long-Term Care Insurance Cost?
The cost of LTCI is based on your client’s age, health, marital status, and the amount of benefits they choose to purchase. For example, a policy with a larger benefit will be more expensive. While hybrid LTCI premiums are guaranteed and will not increase, traditional LTCI premiums may increase if they are filed with the state for a selected class of policies. Rate increases were common on older LTCI policies, but premiums are more stable today.
5. What Happens If I Never Use LTCI Benefits?
With traditional LTCI, your client can purchase a Return of Premium rider, which will refund all premiums paid into the policy to a named beneficiary minus claims paid upon your client’s death. On the other hand, most hybrid LTCI policies have a built-in death benefit that will pay a specified amount to your client’s estate if they do not use the policy.
6. How Does LTCI Differ from Health Insurance and Medicare?
Long-term care is not covered by regular health insurance. Medicare will pay for short-term skilled nursing care but only in certain scenarios. Medicaid will cover long-term care if your client meets the income and asset requirements, which usually means spending down assets. Specific Medicaid rules vary by state, and your client should work with a Medicaid planning professional before considering Medicaid.
7. What Policy Options and Riders Are Available?
LTCI policy options vary by carrier, but most carriers offer some form of inflation protection for an additional fee, which increases your client’s benefit each year. Couples can also take advantage of a shared care rider, available at an additional cost, which allows them to access their spouse’s benefits and vice versa.
8. Can I Qualify for Long-Term Care Insurance with My Health Condition?
LTCI is medically underwritten, so your client should work with an experienced insurance agent to prequalify their health prior to applying for coverage. Most carriers require a telephone or face-to-face interview with your client as well as a cognitive screen, depending on their age. Blood and urinalysis are not required. Carriers will also request medical records from your client’s primary care provider and any specialists. It’s important that your client has seen a doctor in the last 24 months and has had a complete blood profile.
9. How Can I Pay for Long-Term Care Insurance?
LTCI can be paid for using your client’s income, savings, HSA, and even a 1035 exchange from pre-existing life insurance and annuities. Your client should discuss their finances with an experienced insurance agent to determine the right payment method for them.
10. How Do I Choose the Right Insurance Company?
Most of the LTCI carriers we partner with are A-rated or better, but your client can certainly research the carrier to make sure they are financially sound. Your client is purchasing a policy they may not need for many years, and the insurance company should have plenty of reserves in place to accommodate their claim.
These questions reflect the common concerns and considerations your client may have when evaluating long-term care insurance options. Understanding these can help you tailor your recommendations and provide clear, comprehensive information.
