Encore: Is Long Term Insurance Worth The Price?

This is an encore article originally published April, 2009. I thought I should repeat it because, recently, interest in this topic from my readers has increased. So...is long term insurance worth the price?

That depends. It seems to me that if you've seen one long term care policy (ltcp), you've seen just ONE. While many of the features are becoming more standardized among insurers, there may still be important differences in benefits from policy to policy.

Here's what happened with my mother. She had a bias against anything that contained the words: "nursing home." Not an unusual bias among aging loved ones. Anyway, Mom decided to let a salesman sell her a home care policy, one that limited benefits to services delivered to her in her home. In return for a rather substantial premium (she was in her 70's when she purchased this policy--a time when premium rates become exhorbitant), Mom thought she'd receive skilled nursing care, PT/OT/Speech, custodial, incontinence, and related services (if she ever needed them) IN HER HOME.

Try as I might to persuade her to buy a broader policy for only a litte bit higher premium, she balked. "I'm never going to a nursing home," she said. "So why pay for something I'll never need."

Fast forward a few years to when Mom, in the early flowering of her dementia, moved into a home for the aged. Not a nursing home, but congregate housing for seniors. Gradually her ability to independently dress, toilet, be medication compliant, transport herself, and so forth, decreased and she needed fee for service assistance from specialized caregivers. Guess what? After years of paying premiums, her insurer refused to pay for these services. Why? They took a very narrow definition of the word "home" and decreed that a "home" for the aged did not qualify. To collect on her policy, Mom would have to be housed in her own house.

Turned out there was nothing we could do. I complained that her "home for the aged' was, in fact, her current home and that it was not a nursing home. The insurer didn't care. They had found a loophole to avoid paying and they weren't going to budge.

And, of course, she ended up in a nursing home anyway, long after her original nursing home insurance policy had been invalidated for obscure reasons only understood by the company and its lawyers, and at a point in her dementia when she no longer knew where she was, or cared.

The lesson, I believe, if you are interested in "ltcp's" for yourself or a loved one, is to carefully read, analyze and compare policies from many insurers, and especially to study the small print. Easier said than done but not impossible. Very time consuming, but well worth the time.

This kind of coverage is not for everyone. There are some good sources of information on the web, in Consumer Reports, and elsewhere that will help you decide if it's right for you. My message, though, (and my mother's, if she were able to do it over again) is to be very, very careful and to make sure you know exactly what it is you may be buying. As with everything else, let the buyer beware.

Bob Tell
Author, "Dementia-Diary, A Caregiver's Journal"
http://www.dementia-diary.com