4 Mistakes to Avoid when Buying Long Term Care InsuranceJanuary 24, 2014
Long term care insurance is one of the most important purchases that you will ever make. Since it will come at a cost, you need to be wise in buying this product so that you will get the suitable coverage for you without spending excessively. If you’re about to purchase this policy, here are four mistakes that you need to avoid:
1. Waiting too long
Procrastinating is probably the worst mistake that anyone can make when it comes to buying long term care insurance. Remember that your insurability and premiums are highly dependent on your age and health. When you wait until you’re older before you buy, you’ll either need to pay for a higher price tag or worse, get turned down. Furthermore, insurers usually give discounts to healthy applicants. If you choose to buy at a later age, you could miss out on the savings.
2. Buying from unreliable insurance companies
According to one survey, the first thing that people need to look for when buying long term care insurance is the credibility of the insurance company. This is not actually a feature of the policy, yet this ranked as the first. This is because the insurer will be responsible to carry out the benefits of your policy. No matter how comprehensive your long term care insurance is, it will all be for nothing if your insurance company is not strong enough to provide the coverage you need.
Before you buy, it’s important to do research on your potential insurers. Check their ratings, claims payment history, financial strength, and years in business. Likewise, see if any complaints are filed against them. If so, determine if they acted on it and improved their services.
3. Giving up your existing policy for a new one
If a policy with broader benefits is being offered to you, your instinct would be to grab the opportunity and get yourself insured under a broader safety net. However, you need to consider this thoroughly. Will you be charged for cancelling your current policy? Will you be able to refund your premiums?
Furthermore, you need to realize that a new policy usually requires a new underwriting process. You may or may not qualify. And if you do, your premiums will likely increase because first, you are older and may have developed medical conditions along the way. Second, you’re signing up for a broader coverage and that will definitely cost more than your existing policy.
Before you drop your current coverage, talk with your insurer first. If you need more coverage, determine how you can broaden it. Typically, insurers will help you in this. Furthermore, if agents advise you to drop your current policy so that you can get theirs, that’s usually a warning sign that tells you to turn down the offer.
4. Not Understanding the Policy
Long term care insurance is not a one-size-fits-all product. You need to know exactly what you’re buying before you hand in your first premium payment. Make sure that you are clear on all areas of your policy such as the elimination period, care settings covered, as well as how it will pay for your expenses. This way, you will know when the right time to make a claim is and you will not have a hard time in having it approved.
People are buying long term care insurance to manage a future risk. However, when you commit any of these mistakes, having this policy may turn out to be counter-productive. That’s why it pays to do a lot of research and be aware of these pitfalls so that you can make an informed decision.