Three Questions To Get The Best Long Term Care Insurance Costs
Article by Jesse Slome
When it comes to making large purchases such as a car or large screen television, it is important to shop around. Comparing prices for virtually identical products will often save you significant dollars and in today’s price conscious world, saving money is a good thing.
Yet, when it comes to purchasing insurance protection, the majority of individuals do little if any comparison-shopping. That can be a very costly mistake according to leading financial experts.
Comparison-shopping today for insurance products such as term life and even health insurance can be accomplished easily online. These are more mature industries and more competition between insurers and those who market their products give consumers greater access to online comparisons and information.
Many of the newer insurance products such as long-term care insurance or critical illness insurance can only be purchased through an insurance and financial professional. Psychologists acknowledge that buying products about which one has little knowledge, experience or understanding can be highly stressful. The result is the majority of individuals place their trust in one individual. The fear of making a mistake is greater than the fear of speaking to more than one individual.
According to research by the American Association for Long-Term Care Insurance, the national educational trade organization, the vast majority of individuals considering protection today only consult with one professional. Their 2011 study of prices from 12 leading insurers revealed that one could pay as much as 92 percent more for virtually identical coverage.
The wide spread makes comparison shopping increasingly important as some 500,000 individuals are expected to apply for coverage this year. Here are three recommended questions from the Association’s consumer information center.
1. Are you an agent or broker?
Ask 100 individuals the difference between an insurance agent and an insurance broker and few, if any, will be able to describe the difference. However, the difference can be quite significant.
Insurance agents generally represent just one company. They only have access to that company’s line of products and will only offer you the coverage they have available. It may cost less that competitors or it may cost significantly more. Since that is all they have to offer, if it costs more, they are not going to share that important piece of information with you.
Insurance brokers have access to insurance policies from multiple leading insurance companies. For long-term care insurance, that generally includes Genworth Financial, John Hancock, Mutual of Omaha, Prudential and Transamerica. they are able to spread sheet the companies on your behalf and find the best possible cost and value.
2. When was the policy first filed in my state?
This sounds like a highly technical question to ask. But it is highly important. First, if the insurance agent or broker doesn’t know the answer, it demonstrates they probably do not specialize in the field. Long-term care insurance has so many complex moving parts and nuances that it really does pay today to deal with someone who has more than a beginner’s-level knowledge.
The second reason you want to ask this question is that it is one way to judge the likelihood of future premium increases. Policies issued more recently often use the latest data and information upon which to base their pricing assumptions. Clearly the cost and length of long-term care insurance claims have been rising in recent years. This is calculated into the newer costs.
Older policies may be using older assumptions and so that lower price might look attractive. But if the company finds it under priced the coverage, expect to see requests for rate increases in the future.
3. What discounts will I qualify for?
It seems that literally every week retailers like Macy’s announce their biggest sale of the year. We have come to expect them as bogus claims. When you walk into the store, the discount never seems to apply to the particular item you want.
But with long-term care insurance, once a discount is approved by the state, it must be available if you meet the spelled out criteria.
What is important for individuals to understand is that the criteria can vary from one insurance company to the next according to the American Association for Long-Term Care Insurance http://www.aaltci.org. So while everyone today has some sort of discount when both spouses or partners apply for coverage, there can be important differences if only one person meets the required health criteria.
Today it is increasingly important for individuals in their 50s and young 60s to shop their health when looking at long-term care insurance. Don’t just ask which discounts the company offers but specifically ask the agent which you will likely qualify for.
Finally, read as much as you can prior to meeting with the professional. The American Association for Long-Term Care Insurance has a great guide explaining available ways to reduce the cost at http://www.aaltci.org/free-guide/ and no sign-in information is required to read it.
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