10 Things You Should Know about Buying Long-Term Care Insurance

December 8, 2008
Looking to purchase long-term care insurance? If so, you might be trying to figure out what your best option is, how much it is going to cost you and any limitations that are associated with long-term care insurance. The National Association of Insurance Commissioners offers these tips you should consider when buying long-term care insurance.

1. Long-Term Care is Different From Traditional Medical CareSomeone with a prolonged physical illness, a disability or a cognitive impairment such as Alzheimer's disease often needs long-term care. Long-term care services may include help with daily activities, home health care, respite care, hospice care, adult day care, care in a nursing home or care in an assisted living facility.

2. Long-Term Care Can be ExpensiveThe cost depends on the amount and type of care you need and where you get it. In 2001, the national average cost of nursing home care was $56,000 per year, assisted living facilities reported $22,476 per year and home care costs ranged from $12,000 to $16,000 per year.

3. You Have Options When Paying for Long-Term CarePeople pay for long-term care in a variety of ways. These include using personal resources, long-term care insurance and Medicaid for those who qualify. Medicare, Medicare supplement insurance and health insurance you may have at work usually will not pay for long-term care. Long-term care insurance will pay for some or all of your long-term care.

4. Decide Whether Long-Term Care Insurance is for YouWhether you should buy a long-term care insurance policy will depend on your age, health status overall retirement goals, income and assets. For instance, if your only source of income is a Social Security benefit or Supplemental Security Income (SSI), you probably should not buy long-term care insurance since you may not be able to afford the premium. On the other hand, if you have a large amount of assets but do not want to use them to pay for long-term care, you may want to buy a long-term care insurance policy.

Many people buy a policy because they want to stay independent of government aid or the help of family. They don't want to burden anyone with having to care for them. However, you should not buy a policy if you can't afford the premium or are not sure you can pay the premium for the rest of your life.

5. Pre-Existing Condition LimitationsA long-term care insurance policy usually defines a pre-existing condition as one for which you received medical advice or treatment or had symptoms within a certain period before you applied for the policy. Some companies look further back in time than others. 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 or none at all.

6. Know Where to Look for Long-Term Care InsuranceLong-term care insurance is available to you in several different forms. You can buy an individual policy from a private insurance company or agent, or you can buy coverage under a group policy through an employer or association membership. The federal government and several state governments offer long-term care insurance coverage to their employees, retirees and their families. You can also get long-term care benefits through a life insurance policy. Some states have long-term care insurance programs designed to help people with the financial impact of spending down to meet Medicaid eligibility standards. Check with your state insurance department or counseling program to see if these policies are available in your state.

7. Check With Several Companies and AgentsContact several companies and agents before you buy a long-term care policy. Be sure to compare benefits, the types of facilities covered, limits on your coverage, what is not covered and the premium. Policies from different insurance companies often have the same coverage and benefits but may not cost the same. Be sure to ask companies about their rate increase history and whether they have increased the rates on the long-term care insurance policies.

8. Don't be Misled by AdvertisingMost celebrity endorsers are professional actors paid to advertise, not insurance experts. It is also important to note that Medicare does not endorse or sell long-term care insurance policies, so be wary of advertising that suggests Medicare is involved. Do not trust cards you get in the mail that look like official government documents until you check with the government agency identified on the card.

9. Make Sure the Insurance Company is ReputableTo help you find out if an insurance company is reliable, you can take the following actions: Stop before you sign anything, call your state insurance department and confirm that the insurance company is licensed to do business in your state. After you make sure they are licensed, check the financial stability of the company by checking their ratings. You can get ratings from some insurer rating services for free at most public libraries.

10. Review Your Contract CarefullyWhen you purchase long-term care insurance, your company should send you a policy. You should read the policy and make certain you understand its contents. If you have questions about your insurance policy, contact your insurance agent for clarification. If you still have questions, turn to your state insurance department or insurance counseling program.

Do High-Speed Chases Void Auto Insurance?

December 4, 2008
If someone involved in a high-speed chase crashes their vehicle, are they covered by their auto insurance policy?

The Texas Supreme Court is currently debating this question. The court will decide if an auto insurance company should pay medical costs for a boy who was injured in a collision with a driver fleeing police.

In 1999, Richard Gibbons was speeding away from law enforcement officers in San Marcos, Texas, when he smashed his pickup truck into Greg and Maribel Tanner's vehicle at an intersection. The wreck left their son, 7-year-old Roney Tanner, in a coma for a week, hospitalized for a month, and in physical therapy for the next five years.

The Tanner family had expected Gibbons' auto insurance policy, which covered up to $300,000 in damages, to pay for their son's medical bills--but they were wrong. The company refuses to pay, claiming Gibbons violated his auto insurance policy when he led police on a high-speed pursuit exceeding 100 mph against oncoming traffic.

Thus far, the courts have sided with the auto insurance company. The policy in question was purchased in Ohio, where state law voids coverage for "willful acts" of reckless driving that could result in crashes.

The Tanners' lawyer argues that reckless driving is not enough to void an auto insurance policy. He maintains there was no "intentional" harm caused to the Tanners, as police reported that Gibbons slammed on his brakes before impact to avoid the crash.

So who's at fault? It can't be the Tanner family. They were driving safely on a quiet road surrounded by farmland, following local traffic laws. Why should they be stuck with colossal medical bills because of someone else's stupidity and carelessness?

On the other hand, the auto insurance company shouldn't be held liable, either. After all, it's not the company's fault that Gibbons decided to evade police and drive recklessly through town.

For the sake of human compassion--or at the very least, good PR--the company should offer to help the Tanners with medical costs. But with the nation now officially in a recession, finances are tight, and the case for the Tanner family doesn't look good.

The Texas Supreme Court is expected to issue its decision next year

Mortgage rates fall for 2nd day; won't help all

SAINZ – 7 days ago MIAMI (AP) — Mortgage rates fell for the second day in a row Wednesday, and could be heading toward levels home buyers and owners haven't seen this year.That drop is what the Federal Reserve was aiming for when it announced a plan Tuesday to buy $600 billion in mortgage-related securities in an effort to slow falling home prices and rising foreclosures, while kick starting demand among fearful homebuyers.The average interest rate on a 30-year fixed-rate mortgage Wednesday was 5.76 percent, the lowest it has been since February, according to HSH Associates, which publishes mortgage information. The lowest daily figure this year was 5.47 percent on Jan. 23.Mortgage brokers fielded a steady stream of calls Wednesday from borrowers looking to refinance. But some of those callers were confronted with an unwelcome truth: only those with good credit histories and equity in their properties need apply. And with the damage wrought by the real estate downturn, now in its third year, that number has declined dramatically.Lower rates won't mean much for the more than 4 million homeowners who are already behind on their mortgage payments, or the 12 million homeowners who owe more money to the bank than their homes are now worth."This will help the non-troubled borrower, the standard consumer who is making payments on time," said Mike Larson, real estate analyst with Weiss Research. "For the troubled borrower, you really have to look at some other avenues," including modifying their existing mortgage with their current lender.Rates react to supply, demand and risk associated with certain securities. Mortgage rates have hovered stubbornly around 6 percent for months.With this week's announcement to buy $600 billion in mortgage-related securities, the Fed became the 800-pound gorilla in the market. The Fed's demand for securities will drive prices higher, and yields and (with luck) interest rates lower."If these rates hold, you'll see these refinance applications really start to take off next week," said Marc Savitt, president of the National Association of Mortgage Brokers.Already, some homeowners were lining up on Wednesday.Brenda Pittsnogle and her husband are combining their first and second mortgages, with rates of 5.875 and 6.5, in a refinancing deal at 5.375 percent. That will save the couple $170 a month.They had been waiting for the past six or seven months for interest rates to fall this low."We're elated," said Pittsnogle, of Kearneysville, W.Va. "We really never thought that it would go down as far as it has."Meanwhile, homebuyers who have been waiting patiently at the starting line may be enticed to take the Fed's action as a starter's gun. Lower rates and falling prices make the market more attractive for qualified buyers.Compared to the 6.75 percent interest rate homebuyers paid on Oct. 15, at Wednesday's rate borrowers would save $106 a month if they bought the U.S. median priced home of $183,300 with a 10 percent down payment."It really gives a confidence boost to people shopping for homes and everybody thinking, `Wow mortgage rates are so low, I should think about doing something,'" Guy Cecala, publisher of Inside Mortgage Finance, who expects rates to drop as low as nearly 5 percent by the end of the year.While troubled borrowers generally won't benefit from the Fed's move in terms of refinancing, it can help them in other ways. For example, the lower rates could make lenders more willing to modify mortgages of distressed borrowers, experts said."There are programs in place for you if you are having troubles," said Keith Gumbinger, vice president of HSH Associates. "(The Federal Reserve's plan) is aimed at the vast majority of American homeowners who have done nothing wrong but have been affected by what's happening in the housing market."Homeowners who may be most interested in refinancing include those who have adjustable-rate mortgages that have reset to higher rates or will in the coming months."Refinancing waves are a great cleansing process for the mortgage market," Cecala said. "It brings in new home buyers or borrowers as well as lowering the payments of existing buyers. It makes the mortgage market look much healthier."