Is long-term care insurance mostly a rip off?

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Is long-term care insurance mostly a rip off?

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Just found out mom's only covers if she can't walk or eat (has to be both or no coverage?) I thought that her LTC would help her with home care needs and eventually a nursing home only to find out that apparantly her financial planner got her into only will kick in if 2 criteria AT THE SAME TIME are met -- can't walk at all (doesn't count walking with assistance). AND can't eat. That means can't lift a fork to her mouth. Doesnt' mean that she can't get/make her meals which she can't now. Doesnt' that make this LTC useless? I mean wouldnt' medicare cover these costs w/o LTC? My mother purchased this is the hopes that she would have something so she wouldnt' have to sell all her assets if she needed to go into a nursing home (Which right now she won't even entertain -- although I have). Now it seems she's paying for a policy that is b.s. and not worth having. Am I right? Anyone else out there with similiar stories or knows what this means?

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@KEdwards460,

You are mistaken about the benefit eligibility requirements for long-term care insurance.

There has never been any long-term care policy that was sold that required that one to need assistance with walking and eating in order to be eligible for benefits.

The eligibility requirements for long-term care insurance are regulated by both state and federal law.

The requirements to be eligible for benefits are needing assistance with any 2 of 6 Activities of Daily Living (aka ADL's). The 6 ADL's are: bathing, dressing, eating, toileting, transferring and maintaining continence.

If your mother can't walk without assistance, that would imply that she needs assistance to bathe, she probably needs assistance to get into or out of a bed or chair (a.k.a. transferring) and she probably needs assistance to get on and off the toilet as well. Therefore, if your mother owns a policy that meets the federal guidelines (and most policies do), she should already qualify for benefits.

The federal government recently did an audit of the claims practices of 7 of the leading long-term care insurers.

Scott

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Long-term care insurance is a highly regulated insurance product. Most insurance products are only regulated by the state in which the policy is purchased. LTC insurance is regulated by both federal law AND state law.

The benefit eligibility requirements that I outlined above were made into law in 1996 by the federal government. These benefit eligibility requirements are REQUIRED in every policy that meets the federal guidelines. These requirements are not just for "cadillac" policies. EVERY LTCi policy that meets the federal guidelines uses these same benefit eligibility requirements. About 95% of the long-term care policies that have been purchased meet these federal guidelines.

Whoever explained your mother's policy to you, doesn't understand how your mother's policy works. There has never been any LTCi policy sold that would use language in it like you've described. A policy like that would never have been approved by any state department of insurance because a policy like that is useless.

Scott

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Our financial planner talked us into buying a LTC policy. She found a company that was "rock solide" in her words and the really were highly rated at the time. A few years later this company had numerous law suits for failing to pay. They tied up the poor clients in court until they eventually passed away. So I let our policy expire and found more solid investments that are safer and have a guarantee yield. I generally avoid companies who promise that if you pay now they will take care of you later. What happens if they go out of business, or change hands? It is just too volatile now to trust that any company will be around when you need it. And with the aging of the baby boomers, I think we are going to see even more of these law suits in the future.

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My mother has TRANSAMERICA. I have to harrass them to pay her monthly benefit. It use to be $2,100.00 a month. Wiht no written notice, it has suddenly dropped to $1,610.00, and her at home care is $3,600.00 every 2 weeks. So I guess my answer is,"YES" it is a rip off. Better to just go broke and be on title 19. Whatever you pay in, you will never get back. I called and my mom has over $350,000.00 worth of reimbursent money left, so why the drop in her reimbursement? Makes no sense, except the insurance company is not in this business to give money back. Being elderly is a big kick in the butt. No respect and the system stinks!

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I am sorry to read such bad and sad news. However, I have a good story. In 1996 my mother bought a policy for long term care with riders for home health care, home builder care and for not paying any more premiums once she was in a nursing home. There was a long list of criteria for each of which she only had to meet 2 or 3 which was not hard at all. The company is now known as S.H.I.P. and has already paid more for her care than she ever paid in premiums, plus she is not paying any premiums which have flown up very high. Because she has to be in a semi-private room, not all is covered, but her estate and the earnings from her securities take care of the remaining $2,300 a month.

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We had a hard time getting Banker's Life to pay. Nothing as ridiculous as no pay until can't walk of feed oneself, just deliberate hold-ups on the paperwork front that would leave many if not most unassisted elderly unable to navigate the mess. They routinely sent letters saying they needed more information - just that vague, and most of it had actually already been sent - with implications that the other party would have to take care of it, so the one receiving the letter would tend to do nothing. I involved the state insurance comission, writing a long letter and putting cc's to them and to mom's estate planner lawyer (even though she would probably not have done a thing to help us if we had gone to court - was actually out-of-state under some kind of contract with the Puritan company, where they still billed us for any requests or conversations! - which had botched up the Medicaid aspects of the plan big time - long story there.) My mom thought it covered a lot more than it did. We eventually got the total $ 18,000 out of them but it was not easy, and not enough for real long-term care coverage. Beware of policies that SAY "This is not long-term care insurance." Beware of darn near anything that is cheap and/or sold by sweet-talking well-dressed flattering SOBs who make you feel good in order to get you to say yes and sign on the dotted line.
John Hancock's policy looks better, and the one I got through CNA at work is reasonable. You may do best with a reputable independent insurance specialist who understands the ins and outs of things.

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In my experience, my mother's LTC policy with Genworth has been a HUGE help and I would have a hard time affording care for her at the level she's receiving without it. My mother has dementia and psychosis and lives in a group home. About 80% of her monthly expenses are covered by her policy. Genworth is the most reputable and well-established player in this field. My husband and I have our policy with them. I hope I never have to use it, but if my husband or I get sick and need long term care, it will help to keep us from being wiped out and enable us to get services we need to maintain some quality of life.

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When a claimant is diagnosed with dementia ("cognitive impairment"), it usually trumps the "activities of daily living" requirement. Once the neurologist verifies the symptoms, she should qualify for in home care benefits. More than likely, she'll then be evaluated by a nurse to determine a plan of care. That's what happened with my mom and her policy. Good luck!

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Kedwards, I am sorry you are havingso much trouble with your Mom's LTC carrier. Have you spoken directly with the insurance agent that sold her the policy? I worked for a Life and LTC agent for 15 years, and I know there are a few highly rated and reputable carriers out there. The agent should be able to answer your questions as well as directly intervene with the carrier regarding the coverage issues. If that does not work, you might try contacting your State Dept of Banking and Insurance, because insurers are very highly regulated and they want to know when companies are defrauding consumers. I have been touting the benefits of LTCI on various threads and am a firm believer that it is better to pay even $4000 a year in policy premium rather than $4000 a month 'rent' to a nursing home. The really good policies give the same amount of daily (or monthly) benefit for NH care as well as Home Care, which if utilized, allows the Senior to age in place as long as possible. I have personally witnessed this aspect of coverage for 3 seniors, which enabled them to remain at home with virtually round the clock care, thanks to the high LTC benefit amount they purchased years ago. The major carriers in the LTC market have been John Hancock and MetLIfe. Genworth has also been a major player, but I'm not sure they are still in the market. First, make sure you find a well qualified agent who has earned the "CLTC" designation. They have to comply with ongoing continuing education to maintain the designation. AC has information regarding LTC insurance under the 'Money & Legal' tab, then 'Insurance Matters'. Just FYI, although I have no idea who he is, I was surprised to see Scott Olson, "CLTC" offer factual information regarding this issue that we all can use. Thanks, Scott.

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LTC insurance used to be much better than it is now. I think these policies started to get to expensive for insurance companies to keep offering them. Note that as you get older, the premiums on these policies increase, so that people are often forced to give up on them before they ever get any benefit from them. So, yes, I think they are mostly a ripoff.

Is long-term care insurance mostly a rip off?

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