Shopper's Guide To Long Term Care Insurance
Will Your Health Affect Your Ability to Buy a Policy?
Companies that sell long term care insurance medically “underwrite” their
coverage. They look at your health and health history before they decide to issue a
policy. You may be able to buy coverage through an employer or another type of
group without any health underwriting or with more relaxed underwriting. Insurance
companies’ underwriting practices affect the premiums they charge you now and in
the future. Some companies do what is known as “short-form” underwriting. They ask
you to answer a few questions on the insurance application about your health. For
example, they may want to know if you have been in a nursing home or received care
at home in the last 12 months.
Sometimes companies don’t check your medical
record until you file a claim. Then they may try to
refuse to pay you benefits because of information
found in your medical record after you file your claim.
This practice is called “post-claims underwriting.” It is
illegal in many states. Companies that thoroughly
check your health before selling you a policy aren’t as
likely to do post-claims underwriting.
Some companies do more underwriting. They
may ask more questions, look at your current medical records, and ask your doctor
for a statement about your health. These companies may insure fewer people with
health problems.
If you have certain conditions that are likely to mean you’ll soon
need long-term care (Parkinson’s disease, for example), you probably cannot buy
coverage from these companies.
No matter how the company underwrites, you must answer certain questions that
the company uses to decide if it will insure you. When you fill out your application, be
sure to answer all questions correctly and completely. A company depends on the
information you put on your application. If the information is wrong, an insurance
company may decide to rescind your policy and return the premiums you have paid.
It can usually do this within two years after you buy the policy. Most states require
the insurance company to give you a copy of your application when it delivers the
policy. At this time, you can review your answers again. You should keep this copy of
the application with your insurance papers.
What Happens If You Have Pre-Existing Conditions?
A long term care insurance policy usually defines a pre-existing condition as one
for which you received medical advice or treatment or had symptoms of within a
certain period before you applied for the policy. Some companies look further back in
time than others. That may be important to you if you have a pre-existing condition.
A company that learns you didn’t tell it about a pre-existing condition on your
application might not pay for treatment related to that condition and might even
cancel your coverage. A company can usually do this within two years after you buy
the policy, or in some cases later, if you intentionally mislead the insurer.
Many companies will sell a policy to someone with a pre-existing condition.
However, the company may not pay benefits for long-term care related to that
condition for a period after the policy goes into effect, usually six months. Some
companies have longer pre-existing condition periods; others have none.
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