Think twice before you buy a group long-term care policy on line:
There’s a popular trend to sell Group Long-Term Care insurance through endorsements from a variety of nationally know affinity groups, organizations, and affiliates including State government entities. Two clients called today to see if they should be buying Long-term care insurance on line since they and other state of Kansas employees received an offer during the past ten days to sign up now for LTC coverage during the open enrollment period August through September 30th.
I’m pleased to hear that the State is making employees aware of the need for Long-term care insurance protection, and I believe everyone,( especially those who are age 55 and older ) should have a plan in place to protect loved ones from potential catastrophic financial consequences down the road…but……………
Do your homework before you click the enroll now button on the computer screen. Don’t Let the Defense Set Your Plan! The Defense is the Computer’s default screen which customizes a plan based on the part of the country where you plan to retire using care cost averages that may or may not be accurate or appropriate to your individual situation. Here are some plays (checklists) of options to consider before you accept the default recommendation which allows a computer program to run your play for you.
As your coach, I’m going to provide a play book with “basketball terms” applied as the fundamentals of what criteria is important when choosing a Long-term care insurance policy and how to watch out for what I call Accidental Co-pays during a claim event. Here goes:
The Defensive player is the Computer Screen suggesting which play to run. The Offensive player is you “the buyer, and you’ll base your decision on what the Defensive alignment of the Computer offers on the screen only if you are able to understand the alignment..ie, options offered to you..(that’s the downside of computer shopping)..not understanding the options offered….That’s what my two clients told me today..” We have no clue what all this means?????
The Default Defense: (Look for clues) Here are some plays to run to overcome the Default Defense:
- Don’t let the defense set your plan! See what the default defense is doing, then run your play( make your move or pick). Computers tend to use a default recommendation that might not be the one you should choose. The most common example is the __buy inflation in the future, not now. This lowers the premium, but statistics show it will cost you more down the road if you wait to buy the inflation option at attained ages in the future rather than issue age. Picking an inflation option move when you sign up is a winning strategy.
- Group plans tend to offer 90 day elimination periods( deductibles) to lower premium. A 90-day elimination period is considered an accidental co-pay when you’re most likely to access benefits. $200/day for care today growing to $700 of day in 25 years could cost you $63,000 in out of pocket expense before the policy pays a benefit. The sweet spot for elimination periods is 30-days.. seldom offered in group plans.
- Customized General Plans: What data is being used in the customized plan. Is the computer basing your risk today on Home Care Costs, Assisted Living cost or nursing care costs. Assisted living is a much more gentle term than nursing care, but it’s the nursing care costs that put you at the greatest risk. I have a client on claim in a small private room needing full care, and the cost is $6,500 per month. Using an Assisted Living cost risk could be another Accidental co-pay in the future. I would use the nursing care small private room rate risk which now is in the $6000-$6500 range here in Manhattan, Lawrence and Kansas City, and about $5000 per month in other parts of Kansas.
- Individual pool plans vs shared couple plans? Group plans usually do not offer the attractive Shared pool plans with joint waiver of premium. Married couples buying long-term care insurance should look at plans with couples discount (which might be better than the group discount offered), and ways to share the pool of benefits if only one needs care. This type of flexibility is not usually available in group plans.
My Recommendations:
- Use the current costs in your area for full time nursing care, not assisted living so you don’t understate danger of costs as they escalate in the future.
- Determine how much of this risk you can self insure.
- Meet with a professional advisor who specializes in designing Long-term care plans and is certified through the Corporation Of Long-term Care Insurance before you decide.
- Don’t buy a product and water it down to lower premium. Have a professional design you a plan.
- Buy protection now that will be there for you 25 years from now.
- Avoid the Accidental Co-Pays as mentioned above.
Call me before you make a decision to enroll in a group plan. If you are insurable, I can get you some of the features that are important but not available in the group plans. If you are un-insurable due to previous or current medical conditions, and if the group plan offers insurance without evidence of insurability,( meaning relaxed underwriting or no medical questions), then I’d be more than happy to direct you to the best options available for you in the group plan… but see me first before you decide.
Coach, Larry Weigel
CLTC (Certified by the Corporation of Long-Term Care)
More than 20 years of experience designing LTC plans for 400 individual clients
