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Shopping for LTC insurance


The best time to shop for long-term care insurance is before you need it. The longer you wait, the higher your premium will be and the greater your chances of developing a disqualifying illness or disability.
Buying long-term care insurance is an important individual decision and you should plan to spend some time looking into the product, getting answers to your questions, and weighing your options.

Insurance policies are legal contracts. Read and compare the benefits of different policies before you buy one and make sure you understand all of the provisions. Always read the policy before you buy it. Don't rely on marketing or sales literature to provide the information you need to make an informed decision.

Long-term care insurance shopping tips:

  • Shop around before you buy. Policies differ in coverage, cost, and service. Contact several companies and compare the coverage carefully. Get complete information from the insurance agent or representative you are working with.

  • Look for a company with long term stability. Check with A.M. Best, Standard & Poors, Moody's or other ratings firms that keep tabs on financial institutions.

  • The cheapest policy may not be the best policy for you. While you want to shop for a good value, be careful about selecting the lowest rates. If a company has its rates set too low, that may be an indication that it will have to raise its rates later, meaning your premiums can rise to a level you may not be able to afford.

  • The company or agent must disclose to the applicant each premium rate increase on the policy to be offered or similar policy forms over the past ten years.

  • Consult with experts. Depending on your financial situation, it may be important to consult with a financial planner, tax advisor or accountant, or an attorney. His or her area of expertise may help you make the right choice about long-term care insurance.

  • Take your time. Do not be pressured into buying a policy. Generally, there is not a limited enrollment period. A good salesperson will not rush you. Discuss your decision with a friend or relative whose judgment you respect. Allow yourself time to thoroughly review all the information available.

  • Check out your agent. Companies and agents selling insurance products must be licensed in Minnesota. If the agent cannot verify that he or she is licensed, do not buy from that person. Check with the Department of Commerce to confirm an agent's licensing status at www.commerce.state.mn.us

  • Review the policy outline. Minnesota law requires the insurance company to provide an "outline of coverage" form that clearly describes the policy's benefits and limitations. You should receive this before the agent presents an application or enrollment form. The outline should also clearly define the differences between a Medicare supplement policy and a long-term care policy. Read the outline carefully. If you are shopping around, compare the policy outlines from the different companies.

  • Check for pre-existing condition limitations. Minnesota law requires long-term care policies to cover pre-existing conditions, but there is an exclusion period of up to six months before you will receive benefits.

  • Beware of offers to replace your coverage. Be cautious if anyone suggests that you cancel your current policy and buy a replacement policy, especially if it is with a different company or if it involves a change in benefits. The new policy may impose new pre-existing condition limitations. If you want to switch to lower benefits to reduce your premium, your current company may be willing to do so.

  • If you decide to buy, complete the application carefully. Most companies ask for detailed medical information. If you leave out any medical information requested, coverage could be canceled, reduced or denied. Don't believe anyone who tells you that your medical history on an application is not important. Before you sign the application, make sure all the questions have been answered correctly. Don't assume the company representative accurately filled in your health information.

  • Do not pay cash. Pay by check, money order, or bank draft made payable to the insurance company, not to the agent or anyone else.

  • Policy delivery should be prompt. The insurance company should deliver a policy within 30 days of accepting your application. If you do not receive it, contact the company and inquire about the delay. If 60 days go by without information, contact the Department of Commerce.

  • Read your policy when you receive it. All policies are required to provide a 30-day, right-to-examine period. During this period, check the application you signed for accuracy. Read your policy and ask questions about anything you do not understand. Often family members or friends can help. If you wish to cancel the policy, call the insurance company and return the policy by mail within 30 days of receiving it. You are entitled to a full refund with no questions asked. If you decide to keep the policy, make sure your family or friends know where your policy is, when the premiums are due, and how to submit claims to the insurance company. Be prepared to select a relative or close friend the company can notify if you fail to pay the premium.