Clients sometimes hesitate on long-term care insurance because they assume the fine print will disqualify them when it matters most. In reality, the claims experience is far better than the skepticism suggests, though the policy type does affect how claims work.
What to know
- Benefit eligibility is federally standardized, requiring the inability to perform 2 of 6 activities of daily living or a cognitive impairment
- A survey found only 2% of claimants had a coverage dispute that wasn't resolved to their satisfaction
- Reimbursement policies won't pay for unlicensed family caregivers or future care covered by Medicare (highly unlikely); most hybrid policies pay cash with nearly no exclusions
- Standard exclusions across both policy types cover things like self-inflicted injury, criminal acts, and war, not relevant in a typical care event
Planning implications
Many people worry long-term care claims will feel like medical insurance reimbursement hassles. In practice, once the initial claim is approved, payments are typically consistent. If care is in a facility, the provider usually handles the billing and insurance coordination.
The bigger planning issue is how care will be paid. If family members may provide care, a cash benefit policy creates more flexibility for payments.
Just as important, carriers aren't incentivized to deny legitimate claims. A bad reputation in this market travels fast, and advisors like me stop recommending policies with problematic claims behavior.
When to raise this with clients
- When a client expresses doubt that the policy will actually pay
- When comparing reimbursement and cash indemnity policies
- When a client's care plan might involve family caregivers
Bottom line
LTCi exclusions are narrow and largely irrelevant to typical care events. The bigger planning issue is choosing a policy structure that matches how the client intends to use care.
Client resources: I publish short videos and articles explaining long-term care concepts for your clients.
Work together: I'm a long-term care specialist. In addition to articles like these, I help financial professionals evaluate coverage options for clients. Reply or schedule time to refer a client or discuss a case.
Best,
Jesse Vickey
Long Term What?
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