LTC Insurance

     No one relishes the idea of paying insurance premiums of any kind. After all, you can pay and pay and pay and never collect. If you are fortunate.
     The purpose of insurance is to transfer a risk that you can afford (i.e., the payment of a premium with no guarantee of its return) to cover a risk you cannot afford. For example, what homeowner does not insure their personal residence from damage due to fire? Or, what automobile owner does not insure their auto from damage due to a collision? Consider this: The odds of a major fire insurance claim are one in 88, with an average claim of $2,000. The odds of an auto insurance collision claim are one in 47, with an average claim of $8,000.
     Against this backdrop, why would any responsible mature American (i.e., age 65 or older) not insure against the financial risk of requiring long-term care at some point? Consider this: The odds are nearly one in two that a seasoned citizen will need long-term care for about 2.5 years at an average cost of $57,000 per year, with an average claim in excess of $100,000.

The LTCI Alternative

Fortunately, an appropriate Long-Term Care Insurance (LTCI) policy can be designed to fit almost any budget. Most LTCI policies share some common features you should know, to include the following:

• Benefit Amount: How much and how long will the policy pay?
• Benefit Triggers: When will the policy pay benefits?
• Inflation Protection: Will the purchasing power of the Benefit Amount increase?
• Level of Care: Are Custodial and Intermediate Care covered, along with Skilled Nursing Care? Is Home Health Care covered?

Caveat Emptor!

     Caveat Emptor! is Latin for Let the Buyer Beware. With more than 100 companies selling LTCI, this is an appropriate warning. When shopping for an appropriate LTCI policy, remember that financial strength is a key consideration. As with any form of insurance, the policy is only as good as the ability of the insurance company to pay your claim. Check out the financial strength and reputation of the insurance company before you sign on the dotted line.
     There are several established insurer rating services, such as A.M. Best Company (www.ambest.com), Fitch, Inc. (www.fitchratings.com), Moody's Investor Service, Inc. (www.moodys.com), Standard & Poor's Insurance Rating Services (www.standardandpoors.com), and Weiss Research, Inc. (www.weissratings.com).
     Visit these services online or at your local public library.
     Reputation also is important. Contact your state's Insurance Commissioner regarding an insurance company's status and any complaints from policyholders.
     Finally, contact the National Association of Insurance Commissioners for a copy of the Life Insurance Buyer's Guide, and other valuable resources, by phone (816) 842-3600 or online at www.naic.org.