LTC Insurance & You
Insurance companies will investigate most large claims or claims filed for ongoing, continuous care. If a policy-holder deliberately deceived or withheld information which would have affected whether the policy was issued or not, claims can and will be immediately denied. If an applicant in good faith did not reveal information that would not have significantly affected the issuing of a policy, then the insurance company cannot challenge any future claims after the policy has been in force two years or longer.
Legalities/Know Your Rights
Know your legal rights: Once a person purchases a policy, the language cannot be changed by the insurance company, and the policy usually is “evergreen,” or guaranteed renewable for life. A policy can never be canceled by the insurance company for health reasons, but it can be canceled for non-payment. Be aware that group policies available through an insured’s employer may have provisions for non-restricted or open enrollment periods and underwriting may be required. Group plans, however, may or may not be guaranteed renewable or tax qualified. Some group plans include language allowing the insurance company to replace the policy with a similar policy and to change the premiums at that time. Be sure to read the fine print.
It is also imperative to consider that without “inflation protection,” an LTC benefit that would be adequate today might have much less buying power in future dollars. For example, 20 years from now, $100 of daily benefit would only have the buying power at 3% inflation of $55. At 5% annual inflation, in 20 years, $100 would only be worth $38. Structure your individual plan accordingly.