From an underwriter’s perspective, long term care insurance is the most difficult personal insurance line to deal with. Underwriters have to be able to take an applicant’s current medical situation and look many years into the future. More than that, they also must take imperfect information about nursing home costs and other costs associated with long term care, and project that into the future as well – costs which are very different from standard, across –the-board inflation predictions. And they must also take into account advances in medical care that cause patients to live longer: A boon for life insurance pools, but potentially devastating for long term care financial predictions, since medical advances that lead to the happy result of many more years of life for those with debilitating medical conditions have significant impact on a long term care insurance risk pool. The added years of care have to be paid for somehow.
Most companies, however, will take on that very unknowable risk. They will not, however, be willing to “catch a falling knife” by taking someone applying in the individual market who is a long-term care claim waiting to happen.
Some cases are obvious: Current use of a wheelchair, for example, AIDS, or a recent hip fracture on an elderly individual are easy cases. If you wait until you actually need care to buy insurance, you’re going to get a fast rejection.
Other cases, however, are less immediately obvious, both to the individual and to the agent. Underwriting guides from issuing companies can offer a few clues:
- Bipolar disorder.
- Blindness does not disqualify you, unless it’s due to disease or if you need current assistance with activities of daily living.
- Amputation from an accident does not disqualify you. But amputation from a disease does.
- Persistent forgetfulness will disqualify you, even in the absence of an Alzheimers/dementia diagnosis.
- The use of Antabuse, a common medication used to treat substance abuse is disqualifying for up to 12 months.
What doesn’t disqualify you?
There are some conditions that may on the surface appear problematic, but you can actually still get coverage provided there are no co-morbidity factors or other complications. For example:
- Kidney transplants. A kidney transplant by itself does not disqualify you with certain carriers.
- Oxygen use does not disqualify you if you only use it to treat headaches or sleep apnea.
- Use of a cane, unless it’s a quad cane or walker.
If you have struggled with alcoholism in the past, and have a medical history documenting your alcoholism, all is not lost. Absent any other health issues, several companies will consider issuing a policy after at least two years of abstinence or sobriety. However, you cannot have been diagnosed with depression, and you cannot have lived in a halfway house for the last two years. If there are medical complications, such as cirrhosis, this is generally disqualifying.
Long term care insurance underwriters will sometimes consider certain conditions, but only when not combined with certain others. For example, at Genworth, diabetes doesn’t disqualify you. But if it’s severe enough to have resulted in an amputation, blindness, skin ulcers or infections, or if you combine it with heart disease, it’s probably too late to buy long term care insurance.
Also, neither diabetes or smoking by itself will disqualify you. But if you are both diabetic and a tobacco user (within the last five years), you will not qualify for a Genworth policy.
Alcoholic liver disease, surprisingly, will not disqualify you by itself, if you’ve been sober for at least two years. However, if there are any other complications from it, or a history of liver cancer or if a doctor has already recommended a transplant, you won’t qualify.
The link between obesity – a body mass index of over 30 – and long term medical complications is well known. At Genworth, you will have difficulty getting coverage if your BMI as a female is 36 or more, or if your BMI as a male is over 38. You will also generally not get coverage if your BMI is 17 or under.
You can get coverage, even with a history of breast cancer, provided there’s no evidence of metasticisization. Specific guidelines vary depending on the stage of the tumor. But if you complete your course of treatment on a stage 0 or 1 tumor, you may become insurable again as soon as 3 months after the final course of treatment. A stage II tumor is insurable after 12 months from your final treatment. If the tumor gets to stage III or IV, though, you are not insurable.
Skin cancer is common enough to warrant a discussion. A history of skin cancer does not necessarily disqualify you, provided there’s no evidence of spreading. Superficial or low stage melanomas must have a depth of less than 1.7mm, until you fully recover. If you have a deep or high stage melanoma, you become insurable again after at least 12 months have elapsed.
You are uninsurable at Genworth if the melanoma is deeper than 3.5mm.
Do you need a sneak preview? The Genworth guidelines cover scores of medical conditions in detail.
Each company is different, and some may have modestly different guidelines than others. Some companies are more favorable than others if you use anti-depressive medication. If you are a borderline case with any one company, it may make sense to do some homework before applying. No company wants to take cases that have just been declined elsewhere, though.
The best thing to do is to get your policy well before any of these medical conditions have a chance to develop. Because once they do, you may not even know about it until it’s too late – and then you lose a lot of options.
These are not necessarily problems for senior citizens. Some conditions, like cervical and ovarian cancers, schizophrenia, depression, alcoholism and multiple sclerosis, can easily strike people in their 20s. The bottom line: Get the coverage early, well before you need it.