November 16, 2011
Readers: Long-Term Care Policies Costly
One intention in introducing Squared Away this year was that it would become a forum for readers to share views about financial behavior, psychology, decision-making, products, education, and culture.
Some articles have been more successful than others in generating readers’ comments in the space provided at the end of each post. A post last week, “Long-Term Care: To Buy or Not to Buy,” was notable for the heat it generated.
It provided reasons the vast majority of the elderly do not purchase long-term care coverage from an insurance company. While the article, based on academic research, was about personal decision-making, readers focused on problems with the policies themselves:
Samantha Price noted:
Firstly, they are very expensive, so no one should be surprised why so many people are not buying. Secondly, many of the more affordable policies are issued by below-quality insurers, who have already shown their unreliability by being unable to pay their policyholders.
Expensive? Compared to what? Every insured I am aware of who has received benefits got all their lifetime premiums back within a year of going into a care environment.
Richard Kaplan provided his article assessing private and government coverage and pointed out some other “negatives”:
Long-term care insurance has a terrible reputation for price instability. Even the major/solid insurers have imposed 40 percent-plus hikes on existing insureds, knowing that those people are essentially captive customers. In short, purchasing such insurance provides very little peace of mind or any assurance of future affordability.
Lawrence Littlefield agreed there’s uncertainty:
Even if you trust the current management, that management can change. Mutual insurance companies can demutualize to jack up the earnings of those at the top. We saw it with Blue Cross Blue Shield in New York.
Rene Apack, a long-term care insurance broker for 14 years, said she has found that insurers “keep their promises” to her clients:
Rate increases are on all types of insurance policies like auto, home, health, so what is the surprise. … Further, with the low interest rates, premiums have to be raised. It is expensive on the onset but really it’s pennies-on-the-dollars insurance.
Readers, let’s keep the conversation going! Are those who purchased coverage been glad they did, or do you regret it? Please comment below.