[IMG]http://simplefeed.consumerreports.org/rsrc/i/1/_/longtermcare_insurance_how_to_scrutinize_a_polic_8 70459856/4.gif?f=3dcb3160-01dc-11dc-32a2-0019bbc55f7f&s=AewyNia7NTvDvhaDemju5DEsbnVsbCwwLDA *[/IMG] Long-term-care insurance, how to scrutinize a policy
How to scrutinize a policy Don't talk to an insurance agent until you know what kind of long-term-care coverage is best for you. An agent naturally wants to sell you a policy, and may tailor one to fit what you can afford rather than what you need. For guidance, consider a consultation with a fee-only financial adviser. Here are some of the basics you should know.Check the insurer's financial health. Since a long-term-care policy is unlikely to pay benefits for decades (the average age of nursing-home admittance is 83), you'll want to choose a solid company. Don't go with a carrier that doesn't receive the top financial grades from at least two insurance-ratings companies, such as A.M. Best, Moody's, Standard & Poor's, or Weiss. Also consider policies from companies like Genworth Financial, John Hancock, Met Life, and New York Life, which sell plans in partnership programs-group long-term-care policies available in several states (see below for more on these plans). "The states make companies applying to sell partnership policies go through a rigorous auditing process that should mean they're financially strong enough to pay claims in the future," says Allen Hamm, author of "Long-term Care Planning" (Plan Ahead, 2007), and president of a financial planning company that sells LTC insurance.Decide how much you want to cover. You can check out the average costs in your area from the National Clearinghouse for Long-term Care Information (click on "Cost of Care"). Ideally, any plan you buy should include 5 percent compound inflation protection, but this can quadruple your premium. Also, the daily benefit might not cover some extras such as drugs, supplies, and special services, which could add another 20 percent to the cost. When comparing plans, make sure that they have similar coverage caps (the maximum amount the plan will pay).Buy a flexible plan. Try to find a plan that lets your doctor decide if you qualify for benefits. Also look for one requiring that a person be unable to perform no more than two activities of daily living (some require more). One of those activities should be bathing, since 96 percent of nursing-home residents receive help with that. A good policy will cover care not only in nursing homes but also in assisted-living facilities. A home-care benefit should include adult day care, hospice services, and temporary overnight care.Decide how long you want your benefits to last. About 15 to 20 percent of people in residential-care facilities stay more than a year, and about 8 percent will live there for more than three years. The average stay for people in assisted-living facilities, for example, is 28 months. Therefore, to be safe, you might consider a four-year benefit.Check out partnership plans. Numerous states now allow you to buy a "partnership" plan that protects some or all of your assets from being depleted, but you can't exceed Medicaid income limits. If you move out of state, you can keep the plan but you usually lose the asset protection. And like other group plans, you won't be able to tailor coverage to your needs. "California's plan doesn't allow you to get a daily benefit worth less than $150 a day, which may price the premiums out of range for many people," says Bert Hughes, a financial planner in Danville, Calif. To learn more about state plans, go to the Long Term Care Partnership Program Web site.Posted: August 2008 ? Consumer Reports Money Adviser issue: August 2008 Subscribe now!
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