Episode: What are options if you get declined for Long Term Care Insurance

Every insurance company has their own health requirements in order to issue a Long Term Care insurance policy. Many times the agent doesn't ask the right questions or other issues come up. The American Association for Long Term Care Insurance explained options available.

Video Transcription

If you're shopping for long-term care insurance and you are concerned about being declined because of existing health conditions or if you have already applied and you've been declined, what are your options? This short video will explain. Hi, I'm Jesse Slome, executive director of the American Association for Long-Term Care Insurance. We're a national trade organization. Our mission is to advocate and to educate both consumers and insurance professionals. We don't sell insurance products, so after watching this video, if you have more questions, speak to your insurance professional or if you'd like to be connected with a long-term care specialist, call our organization.

When it comes to long-term care insurance, not everybody can health qualify for this product. In fact, here's some data to show you exactly what I mean. For new policies purchased in 2014, and this is data based on association studies, here's what we found. 62% are couples who both purchase policies. 20% are couples where only one purchases coverage. Now, that may be because the one spouse cannot health qualify. Of those people who take the time to apply for long-term care insurance on the right, you can see that after age 60, as many as one in four to as many as almost one in two people are declined by the insurance company. 

Insurance companies don't look for people who are in perfect health. They certainly accept people who are taking prescription medications and people who have health issues, but certainly, they need to avoid those people that they know statistically are going to be high risks for needing long-term care insurance. What are your options? Before you apply for long-term care Insurance, if you suspect that you, a partner, a spouse, have some existing health conditions or you take multiple prescription medications that control your health, make you in good health, but you're still taking prescriptions, you need to speak to a long-term care specialist who represents multiple companies because they are in the best position to know what insurer will accept you.

You don't want to be declined at the get go. If you have been declined, well, then it's also important to find a long-term care specialist because even if you've been declined with one company, you may be acceptable to a different company, but only they will know. A second option is to consider what I call pairing, buying traditional long-term care insurance for one individual and pairing it with a short-term care insurance policy for the individual who has some health issues. Short-term care insurance policies pay for about one year of care, but consider this, 49% of all long-term care insurance claims last one year or less and short-term care insurance policies are much more...

They're easier to health qualify for. Many of them ask only a limited number of questions and don't do all the exams that traditional long-term care insurance does. Now, all long-term care insurance policies today are different, probably more different than I've seen them in many, many years. That is why today, we advocate that you work with a knowledgeable and experienced long-term care specialist because you only buy this coverage once. It's not like other types of insurance that you can switch in the years ahead. Once you buy it, that's the policy you're going to keep, so you need to do it right from the get go.

There are three things that we advise consumers to ask when they're talking to an insurance professional. The first is how many years have they been selling long-term care insurance? I will tell you, I've been in this business since the late 1980s. While I don't sell insurance, I am still learning. The policies are significantly different, and each year, new policies are coming out with different benefits and features, so someone that has several years, typically at least five years of experience in this business that will serve you well.

The second question relates to number one. Ask the agent how many policies they've sold in each of the recent years. There are lots of agents who may have been selling long-term care insurance for 10, 20 years, but if they're only selling, if they're incidental producers and they're selling less than four or five policies a year, I'm just sorry. They will not have taken the time to really gain the expertise. More importantly, if you have health conditions, they will not have the relationship with the home office health underwriters that could be critical to getting you approved or avoiding a denial.

The third and perhaps the most important question to ask is how many longterm care insurance companies is the agent appointed with. Appointed is the keyword. That is industry jargon for the agent having the ability to sell that particular company's policy. If they can't sell it to you, why are they going to talk about it in glowing terms? Consumers understand when you go to buy a car, if you go to a Ford dealership, the Ford guy is going to sell you a Ford. He's not going to tell you all the attributes of a Toyota, but with long-term care insurance, the only way an agent can earn a commission for the sale is if they are appointed with the company.

You want to ask, "How many companies are you appointed with?" A good specialist today will be appointed with two, three, four or more large long-term care insurance companies, and at least one or two of the short-term care insurance companies. It really is important to avoid being declined for long-term care insurance, because increasingly, some companies are making it impossible for you to apply if you've already been declined by another company. The cost to the insurance company of health underwriting is amounting to almost $1,000 an individual, so they don't want that expense.

Therefore, if you have more questions or you'd like to find a local long-term care insurance specialist for your area, you can visit our website, aaltci.org, and click on the free no obligation quote. Your information will go to just one specialist. You will not be [inaudible 00:06:30] with phone calls like from other websites, from dozens of people. Just go to one long-term care insurance specialist or call us and speak to our office. We'll be only too glad to help. Thanks for watching.

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