5 Mistakes to Avoid when Shopping for LTCi


Long-term care insurance is a vital part of a financial plan, especially for retirement. If you decide to purchase a policy, here are five common mistakes that you need to avoid as you shop around.

 1. Buying Too Late

The ideal time to buy long-term care insurance is during your 50s even if you’re most likely to make claims during your 70s or 80s, because buying early gives you access to more affordable rates. It also raises your chances of qualifying because of good health.

Rates of long-term care insurance greatly vary by an applicant’s age. Experts say that carriers raise premiums simply because of how old an applicant is. In fact, each year that those in their 50s wait to apply can correspond to a 3 to 4 percent increase in premiums.

2. Foregoing Inflation Protection

Though inflation protection adds up to the cost of your policy, it’s important to incorporate it in your coverage. This feature grows your benefits each year, so that it can keep up with the rising cost of care services. Failing to protect your benefits from inflation can result to out of pocket payments in the future.

Insurance companies offer different levels of inflation protection to suit every need. You can choose based on your age and how much risk you’re willing to take.

3. Purchasing based on Price Alone

There are factors that you need to consider when buying long-term care insurance, and affordability is one of them. However, you shouldn’t base your decision on the price alone. You should also look into how reliable the insurance company is. Make it a point to purchase from a company who has the financial strength to stay in business and pay your future claims.

You can check an insurance company’s performance through the ratings of independent organizations such as Moody’s, Standard and Poor’s, and A.M. Best.

4. Not Shopping Around

Long-term care insurance is one of the most significant purchases you’ll make, and you should take time in shopping around. Aside from comparing rates, make it a point to look into other products that offer long-term care coverage such as life insurance and annuities that offer benefits for qualified care expenses.

Traditional long-term care insurance and hybrid policies both have their advantages and disadvantages. Most hybrid policies are appealing because they offer the flexibility that traditional long-term care insurance doesn’t. They are designed to offer long-term care benefits if you need them and benefits if you don’t. However, coverage from combo policies may not be as comprehensive as what a traditional policy offers. That’s why you need to evaluate your needs and determine which makes more sense for you.

5. Failing to Read and Fully Understand the Policy

It’s important to know what you’re buying. You need to read and understand what’s written on the policy to avoid conflicts during claim time. Before you buy, it’s important that you familiarize yourself with insurance terms and how the key features work.

Insurance language can be hard to comprehend, but don’t fret. Your insurance agent is responsible to explain the policy to you, and you can always contact them for clarification. Meanwhile, you can seek the assistance of another financial professional to help you in understanding what’s actually included in the policy that you’re eyeing to buy.

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