Home Ask Question Answer Questions My Q&A Categories Ask the experts Expert leader board

Seema's Questions & Answers

in Beauty & Fashion, Food & Drink& Personal Finance & Tax

11

Rank

Total Points: 53264

Answers Given: 7896

Questions Asked: 26

Best Answers: 42

Three More Ways to Save on Long Term Care Insurance?

Asked by karn singh in Personal Finance & Tax at 3:17 PM on February 20, 2009

Seema's Answer

Married Couples and Partners Can Save 15% to 40% Each Year

Discounts are offered by long-term care insurance companies to married adults and even unmarried adults who are living together. These discounts vary from one insurer to another and typically require that both individuals purchase coverage.

However, some companies will offer a discount when only one couple purchases coverage (sometimes only one individual is insurable). Some companies offer discounts to domestic partners or individuals in committed relationships.

And, here's an important tip for those who are regrettably anticipating a divorce. At the time of writing this article, most insurers will not remove the "marital" discount when a couple gets divorced. But you'll need to buy this coverage while still married.

Adding A "Deductible" Can Save 20% Each Year

You are probably familiar with the concept of deductibles on your car, home and even your health insurance. Simply, you pay some of the cost before your insurance kicks in.

Deductibles on long-term care insurance policies are typically referred to as the Elimination Period. This is the number of days you choose to pay fully until your benefits for qualifying care begin.

The longer your Elimination Period, the lower your annual premium will be. Keep in mind that, generally, your initial need for long-term care will not be as intense or costly as the care you'll need over longer periods of time. Maybe you have family members or community resources you can turn to for those initial days.

A 2008 study by the long-term care insurance trade organization reported sales by Elimination Period:

20-to-30 Days 7% of buyers
31-to-89 Days 7%
90-to-100 Days 83%
100+ Days 3%

A Defined Benefit Period Will Save 16% to 53%

One of the most difficult decisions you'll face when selecting your long-term care insurance is how long should benefits last. No one can predict how long you'll need care.

Why averages are not relevant. Because your chances of needing long-term care are either 0% ... or 100%. Thus, a good way to approach your planning is to look at the value of financial assets you want to protect with long-term care insurance. Then you can back into a daily dollar amount and number of years of coverage.

What can you save? A policy that pays for 5 years will save between 16% and 27% yearly compared to an unlimited (also called a lifetime) benefit. A policy that pays 3 years will save 36% to 39% compared to an unlimited benefit.

And, one of the best ways to save is to work with a knowledgeable long-term care insurance professional who has access to policies from multiple insurance companies. They should be willing to answer your questions and to provide you with no-cost price quotes without any obligation.

Answered at 3:45 PM on February 20, 2009

Read answer

Long-Term Care Insurance Industry - 2009 Forecast and Trends?

Asked by karn singh in Personal Finance & Tax at 3:17 PM on February 20, 2009

Seema's Answer

Heightened consumer awareness, younger buyers, reformulated products and the intensification of multi-life sales -- have led to a steady growth of long-term care insurance policies. Despite some adverse factors -- in particular, the weakened economy -- we anticipate that sales for the just-ended year will be in the 385,000 policy (and group certificate) range, with premiums up several percent over the prior year. For 2009, our predictions all point to continued growth in the number of Americans who are purchasing this form of protection.

What's driving the continued growth of new policy sales, and how can insurance professionals capitalize in the year to come? The industry is benefiting from heightened positive coverage within consumer print and broadcast media about the importance of long term care planning. More importantly, many of the reports convey important information about the best ages to start planning (with a slant toward pre-retirement) and what constitutes appropriate and affordable coverage. News stories are actually telling consumers when and how to procure insurance protection.

Once primarily a senior product, buyers of long term care insurance continue to get younger. As recently as 2000, the average policy was written on a 67-year-old. Last year, according to Association studies, some 83 percent of all new individual applicants were under the age of 65, while the average age was 58. As a result of the significant demographic shift, leading insurers have retooled their product offerings to address the two primary concerns of younger buyers: affordability and the concern about paying many years for something that might not be needed.

The result has been the introduction of a variety of "life stage" long term care insurance policies that enable policyholders to lock-in their health insurability and purchase a more limited level of protection with the future ability to purchase additional coverage periodically in the future. Provisions for these policies vary, and it's fair to recognize that the added coverage is purchased at attained-age rates. That said, the ability of agents to now allow pre-retirement-age buyers to "kick the tires" by owning some long-term care insurance offers one of the greatest opportunities to expand and grow market penetration into the future.

Looking ahead, three significant marketing opportunities will likely yield the greatest results for producers seeking to identify new prospects or convert their existing clientele into long-term care insurance prospects.

The first is recognition of maturing awareness among consumers. The industry has entered a new phase of awareness; one that requires focus on new messaging pertaining to health insurability, affordability and the ability to receive care in one's own home.

For those targeting seniors, the increasing number of states rolling out LTC Partnership policies has generated a good deal of excitement among insurance agents who must now complete additional continuing education training. The opportunity to build sales -- especially among middle-income consumers -- will be predicated on the willingness and ability of states, insurers and agents to promote the importance of LTC planning, coupled with the key benefits provided by Partnership provisions. It's still very early in that process.

Answered at 3:44 PM on February 20, 2009

Read answer

How to Choosing a Long Term Care Policy?

Asked by karn singh in Personal Finance & Tax at 3:15 PM on February 20, 2009

Seema's Answer

Well, begin by shopping around and comparing prices. You can look online and you can talk to local brokers, financial planners, and insurance agents to get recommendations. But once you have some potential providers in your sights, there's much more to consider.

The policy you are considering should very clearly state what it will cover and all of the terms and conditions contingent upon its paying out. You have to know exactly how your policy would work if you ever needed the kinds of services that it's designed to cover, for different policies are not all alike as I mentioned above. If you believe your policy will pay you more money than it actually will, if you don't realize that you have a waiting period before the insurance benefits will kick in, you would be in for a very rude surprise...and if you know that now, you might think twice about laying out premiums for a policy that doesn't really satisfy you.

Your LTI policy should not be one of the ones that requires you to spend time in a hospital before you can become eligible for your coverage. Salesmen will tell you that this stipulation keeps your premiums lower, but this is a rip-off of a policy and the few bucks you may save on premiums aren't worth it at all. This is a disguised way of trying to determine if you are "truly needy" and not wanting pay out unless it's absolutely necessary. Insurance companies have justified cause in mitigating adverse selection, but enough is enough. In addition, your policy should have just one deductible that holds for the life of the policy. Don't buy one that would have a shifting or variable deductible. Don't buy a policy that seems to have too many "outs" for the provider.

Your policy should always stay in force as long as you pay the premiums. That sounds like a no-brainer, but in other words you should not have a policy that could be canceled on you at any time just because the insurance company suddenly decides you're too high a risk or that it has too much LTI in force. There are some out there like that. Don't buy them.

You should also have a policy that allows you to stop paying premiums without any interruption in coverage or benefits once the policy starts paying out. You should also have a provision in the policy that allows you to decrease your premiums (and benefits, of course) if you can't afford the premiums you have now.

Your LTI policy should contain a provision for inflation protection in the form of either an automatic increase in your benefit on an yearly basis or the guaranteed right to increase your benefit.

Any good LTI policy will include coverage for dementia and at least one full year's worth of coverage for a stay in a nursing home or full-time home health care. If you are looking at a policy that does not include these things, don't buy it.

And at last, you should only buy a long-term care policy that gives you a guaranteed 30-day cancellation right from the time the policy is issued. This gives you the opportunity to thoroughly read through and review your policy to make sure you definitely are getting what you want.

Answered at 3:43 PM on February 20, 2009

Read answer

Long Term Care Insurance - What it is and Why It's Essential ?

Asked by karn singh in Personal Finance & Tax at 2:53 PM on February 20, 2009

Seema's Answer

Long term care is required by those who cannot perform the basic activities of daily living and are generally not sick in the traditional sense. Dressing, bathing, eating, toileting, continence and walking are activities of daily living.

Coverage extends to home care, assisted living, adult daycare, respite care, hospice care, nursing home and Alzheimer's facilities. If home care coverage is purchased, long term care insurance can pay for home care, often from the first day it is needed. Depending on the policy benefit maximum, it will pay for a visiting or live-in caregiver, companion, housekeeper, therapist or private duty nurse up to 7 days a week, 24 hours a day. Without long term care insurance, the cost of providing these services may quickly deplete savings.

If you are uncomfortable relying on your children or family members for support, you will find that long-term care insurance could help cover out-of-pocket expenses. Premiums for this policy may be eligible for an income tax deduction. Your age will determine the amount of deduction. Generally, benefits received from this contract are excluded from income.

Medicaid provides some of the benefits of long term care insurance but generally does not cover long term care provided in a home setting or for assisted living. This policy is very important especially if you plan to live really long. However, it's also very expensive. So do you do without?

No, take your time to shop for quotes from reputable providers and you'll make savings that might run into a few thousand in premium dollars over a few years.

Answered at 3:42 PM on February 20, 2009

Read answer

Long Term Care Insurance Coverage ?

Asked by karn singh in Personal Finance & Tax at 3:07 PM on February 20, 2009

Seema's Answer

Long term care insurance is a type of insurance that covers all, most, or a lot of the costs of needing to go into a nursing home and/or receiving assisted care. Different long term care policies have different stipulations, and needless to say those with more coverage will cost more money in premiums.

Long term care insurance is often conceived of as a "pot of dollars" that a person can draw from if they ever come to meet the criteria under which their policy will pay. An LTI policy may provided ultimately unlimited funds, or be paid for up to a certain monetary amount of coverage.

Long term care insurance will pay for extended health care and assistance beyond the narrow definition of "specialized care" that Medicare/Medicaid will pay for.

People become eligible to buy LTI when they are at least 40 years old. However, it's exceedingly difficult to find an insurer who will underwrite an LTI policy on someone who is older than 80, as people, even those who have managed to stay in good health to that age, are too much of a risk to need the services that the policy covers from that time forward. It's estimated that 33% of all men and half of all women will need long term care to one extent or another given today's life expectancies and assuming women continue to, on average, outlive men.

Given the likelihood of needing long term care, it's advisable to consider buying it when you're only in your 40s or early 50s (if you are still healthy enough to qualify; there are some people who need long term care who are not even 40 yet). As with life insurance, the younger and healthier you are when you apply, the lower your premiums will be. You would also find it easier to afford a policy that has no waiting period before benefits kick in if you buy one at a younger age. (The typically bought policy has a waiting period of 100 days during which time you would have to pay for long term care expenses by some other means before the policy begins paying out.)

The sorts of things that LTI will pay for include:

*In-home help with performing ADLs (activities of daily living)--things like feeding yourself, dressing yourself, cleaning yourself. There are six recognized ADLs.

*Adult day care or similar programs

*Going into a nursing home or otherwise receiving assisted living care from professionals outside of your own home.

*In-home nursing care.

LTI is not cheap, even if you buy it at a younger age. You should consider buying it if you feel you will have a need to protect your assets, protect or be independent of your other family members, and would want to have more control over where and from whom you receive your services. One recommended rule of thumb is that if you have a net worth of at least $2 million you should not buy LTI because you should be able to afford to pay for your own expenses, even though the services can cost $50,000 to $80,000 a year in today's dollars. If you do take out a policy and then your net worth grows to over $2 million, you can always cancel the policy even though you will have lost your premium dollars paid in to that point.

Some policies can be paid for in just a few years, depending on how much you want to pay for them and how much coverage you want.

Answered at 3:43 PM on February 20, 2009

Read answer

Long Term Care Health Insurance - Do You Need It? ?

Asked by karn singh in Personal Finance & Tax at 2:52 PM on February 20, 2009

Seema's Answer

You have spent valuable time surfing the Internet and making a list of insurance companies who claim to provide insurance covers at low rates. But before you proceed to get yourself insured with them are you aware about the policy and what benefits you can expect from them? While there is no doubt that one should opt in for insurance covers at a young age, one should not jump in for a cover that serves them no purpose.

Let us look at it from this angle. You are 18 years old and are going in for a 5 years policy after paying a small premium. The policy stipulates that you will not get any money if you survive the period of 5 years. Just because this policy is very cheap, it makes no sense going in for the same. The odds of your surviving this 5-year period are very high and you can as well say `goodbye' to your money. While it makes sense to search for low cost premiums, it does not mean going in for any premium just because it is priced low.

Long-term care insurance is for them who cannot take care of themselves. It is meant to pay the health they require in the event that they cannot perform normal activities like eating, getting out of bed, bathing, going to the bathroom, getting out of a vehicle, dressing and other tasks that healthy perform during the course of a normal day.

Answered at 3:41 PM on February 20, 2009

Read answer

Should You Buy Long-Term Care Insurance? ?

Asked by karn singh in Personal Finance & Tax at 2:51 PM on February 20, 2009

Seema's Answer

If LTC insurance was more affordable, it would be an easy choice to make. Traditional policies that pay a $150 daily benefit and adjust for inflation typically cost upward of $1000 per year. Fortunately, some insurers who offer long-term care coverage are coming up with ways to reduce premium costs. Here are a few things to remember when you're shopping for LTC coverage:

1.) Don't buy coverage unless you think you can afford a 10-20% increase in premiums later on. If you cannot make your payments, your coverage will be discontinued and whatever money you have paid already would be wasted.

2.) Save money by opting for a 90-day elimination period. This is similar to a deductible, but for LTC insurance. Your premiums will be lower, but if you need LTC in the future, you will have to pay for the first 90 days.

3.) Consider a policy that will cover a maximum of three or five years. 92% of policyholders with a three-year benefit period who file a claim for LTC do not use up their benefits. This may sound risky, but the premiums will be much lower and there is only a slight chance, statistically, that your benefit period will expire while you still need LTC.

4.) Consider a plan with a reduced daily benefit. You will pay lower premiums, but you will still need considerable savings to pay for LTC. This is a good half-measure for those on the fence. Some plans will pay based only on the services provided - not room and board. This is a viable option because your retirement plans probably already assume that you will have to pay a mortgage or rent every month.

5.) Choose an insurer that allows unlicensed caregivers. You don't need a trained nurse for daily tasks like feeding and bathing, and unlicensed help costs much less.

Answered at 3:39 PM on February 20, 2009

Read answer

Long Term Care Health Insurance - Ways to Reduce Your Expenditure on This Insurance?

Asked by karn singh in Personal Finance & Tax at 2:50 PM on February 20, 2009

Seema's Answer

Firstly, try to get several quotes for your long term care health insurance. Shop around first before you decide to take up policy with any insurance companies. This is because the prices for the same policy and coverage can vary as much as a few hundred dollars, so it is wiser for you to shop around first.

Next, you can set a longer elimination period. Elimination period is the amount of time you need to pay before the policy starts to pay. When you increase your elimination period by 90 days, you can save up to 15% of your premiums annually.

Every state has their own department which is in charge of insurance and you will obtain great knowledge about long term care health insurance by paying them a visit. The decisions are usually trustful and you can rely on them to make better and smarter decisions.

You can also consider the way of asking people who are close to you for recommendations. Their recommendations will help your search a lot and saves your time on your work. Ask them about their previous experiences on long term care health insurance with insurance companies. If they are satisfied with certain companies, you can shortlist them as great choices and this makes things easy for you.

To ensure that you can get long term care health insurance which quality is guaranteed, you have to know your insurance company very well. Do not go for a company without having abundant knowledge about it. Different companies provide different quality and way of services. Look for the companies' rating and avoid those which are poorly rated. There are many organizations out there to help you to search for companies' rating.

Answered at 3:38 PM on February 20, 2009

Read answer

Long Term Care Insurance - Finding One Without Burning a Hole in Your Pocket?

Asked by karn singh in Personal Finance & Tax at 2:50 PM on February 20, 2009

Seema's Answer

1. Purchase a group policy.
Employers usually subsidize a group policy; therefore, you can to pay lower premiums compared to when you purchase long term care insurance on your own.

2. Purchase the insurance before you get older.
Basically, how much premium are you going to pay for your long term care insurance depends on your "issue age", in other words, the age when you apply to be covered by the insurance. When you get older each year, your premiums will increase by 8-12%.

3. Purchase the insurance with your spouse.
If you are married, consider applying for coverage with your spouse because a joint or shared benefits policy allows you to use your joint benefits with more flexibility. Your spouse might also receive discounts up to 25%!

4. Purchase insurance before you are sick.
There are good health discounts which you can take advantage of if you purchase long term care insurance before you developed health problems. The "Healthy Person" discount is about 5-25% depending on your circumstances. Guess what? Even if your health gets worse in the future, you will still get to keep the discounts forever.

5. Make full use of tax deductions.
Premiums you pay for tax-qualified long term care insurance are tax deductible since they are considered to be medical expenses. The premiums can be deducted on Schedule A if the expenses are more than 7.5% of your adjusted gross income.

6. Reduce your daily benefit.
By reducing your daily benefit, you will be able to reduce your premiums for long term care insurance as well.

7. Make one lump sum payment of premiums.
You will be able to save more money if you choose to pay lump sum annually rather than paying the premiums monthly to save on the administration and service charges.

Answered at 3:38 PM on February 20, 2009

Read answer

Long-Term Care Insurance and How Underwriting is Important to the Application Process?

Asked by karn singh in Personal Finance & Tax at 2:51 PM on February 20, 2009

Seema's Answer

The function of the underwriter is to acquire-or to "write"-business that will make the insurance company money, and to protect the company's book of business from risks that they feel will make a loss. In simple terms, it is the process of issuing the long-term care insurance policies.

Each insurance company has its own set of underwriting guidelines to help the underwriter determine whether or not the company should accept the risk. The information used to evaluate the risk of an applicant for insurance will depend on the type of coverage involved.

The following are the underwriting procedures used by the company.

The first step in underwriting after the application is received is where the applicant lists his or her relevant personal health history and authorizes the insurance company to examine their medical records.

Next, the carrier will schedule a phone health interview that lasts for about 15-20 minutes. This is to assure the carrier that the applicant does not have any cognitive problems.

The carrier will often request a copy of the medical records from the applicant's primary care physician to verify the person's overall health. The records from a specialist may also be requested as well.

The biggest delay in this underwriting process is in the request for medical records. Sometimes the doctor's office does not process the record quickly.

Once the carrier receives the medical records, a final underwriting decision usually follows very quickly.

A long-term care specialist can match you up with the carrier and a plan that best fits your health and budget.

In conclusion, health determines the way underwriters look at each potential client. Having one particular ailment may not be an issue with one carrier but may be with another carrier. Additionally, if a client has more than one illness, the combination may cause them to either be uninsurable or have the premium increased or rated up.

Answered at 3:40 PM on February 20, 2009

Read answer