Long term care insurance can be the single most cost effective insurance product available to individuals to cover the costs of a long term care event. As we have discussed in other posts there are a number of items to consider when developing a long term care insurance strategy. These items include things like benefit amount, benefit period, and inflation protection. Designing a policy that satisfies your long term care needs and budget can be a very enlightening process. But, in some situations the best route may be to determine whether or not you would be eligible to qualify for long term care insurance coverage from an underwriting perspective.
Many people who purchase insurance coverage do so through their employer. The most common type of insurance available to individuals through their employer is health insurance. Other types of coverage may include dental, vision, disability, and even long term care. Insurance coverage offered through an employer is usually guaranteed issued. This means when an individual signs up for insurance coverage through an employer sponsored insurance plan, the insurance company is required to provide coverage to the participating employee regardless of any existing medical conditions. In a situation where an individual may have a preexisting medical condition that would prevent them from securing coverage on their own, an employer sponsored plan is a good alternative because the insurance company doesn’t have the option to decide who can and can’t participate in the plan.
When applying for individual long term care insurance each policy is fully-underwritten. This means an individual must apply to be considered by the insurance company to be healthy enough to receive coverage. If you are healthy enough to receive coverage the insurance company will issue a policy, if you are not they will decline to offer coverage. The good news is if you apply and receive coverage the insurance company cannot take the policy away from you regardless of any medical issues you may have in the future. However, if you fail to maintain the coverage by making premium payments, and the coverage lapses, the insurance company is under no obligation to reinstate the policy.
Long term care insurance companies evaluate a number of factors when deciding whether or not to offer coverage to a potential insured. Just as the applicant is trying to reduce the risk of having to pay out-of-pocket for a long term care event, so too is the insurance company. The advantage the insurance company has is they are insuring multiple lives. This means they will have to pay benefits for some insured’s and no benefits for others so they can reduce their overall risk.
A few of the factors a long term care insurance company evaluates are prescription medications, height and weight, tobacco usage, medical history, and lifestyle. Now, just because you might be taking blood pressure or cholesterol medication doesn’t mean you won’t qualify for coverage. Provided these medical conditions are under control you shouldn’t have any problems. However, if you are a diabetic, have had a stroke or heart attack, or require the use of a narcotic to manage pain you may have some obstacles to overcome before an insurance company would be willing to offer coverage , if any at all. In many cases height and weight doesn’t tend to be an issue, unless it is combine with some type of medical issue.
Overall, most long term care insurance companies are looking for ways to offer the insured the opportunity to acquire a policy. But, in some cases, by simply waiting one to twelve months to obtain coverage after a surgery or a health scare can be the difference between having a policy approved or declined. When working with an advisor to obtain a long term care insurance policy it is important to discuss your medical history with them. A good advisor will be able to anticipate potential issues an insurance company might have with specific medical issues, and make recommendations on how to approach obtaining coverage. This doesn’t mean everybody who applies for coverage will be able to obtain it, but by dealing with the concerns a head of time you will have a better understanding of what to expect.
In addition, each long term care insurance company approaches the underwriting of certain conditions differently. What may be a comfortable risk with one company can be a decline with another. Some companies might require you wait two years after receiving radiation treatment, while others may only require you wait 6 or 12-months. Each situation is different. If you have a concern regarding your ability to obtain coverage feel free to call us or complete a long term care insurance quote request to learn more.