What Constitutes a Good LTC Policy

Last Updated:

3/12/03

Financial Stability of the Company:

Be sure the insurance company you select will be capable of paying the benefits if and when they are needed. Ratings of these companies are available at most public libraries or you may call the rating services directly.

Rating Service	Telephone Number	Web Page	Rating Scale
A.M. Best Company	(900) 555-BEST	www.ambest.com	A++ to ?
Duff & Phelps, Inc.	(312) 368-3157	www.dcreo,com	AAA to D
Fitch Investors Service, Inc.	(800) 75 FITCH	www.fitchiba.com	AAA to ?
Moody’s Investors Service	(212) 553-0377	www.moodys.com	AAA to C
Standard & Poor’s	(212) 208-1527	www.ratings.standardpoor.com	AAA to D
Weiss Research, Inc.	(800) 289-9222	www.weissinc.com	A to F

***These ratings carry no guarantee of accuracy nor do they reliably predict the future of the company. This is a new industry: there will be changes based on future legislation or industry initiatives. Ratings are based on the history of the whole company not the LTC product.

Guaranteed Renewable:

This means that the insurance company cannot cancel the policy if the premiums are paid on time, even if the health condition of the insured person has deteriorated. However, you should note that the premiums paid each year can and probably will go up in price for any company.

Waiver of Premiums:

This provision allows you to stop paying premiums once you are receiving benefits from your policy. This waiver should apply to ALL levels of benefits - home health, nursing home, assisted living, and adult day care.

Levels of Benefits:

All levels of care should be included in the policy: home health, assisted living, adult day care, group homes, and nursing home care.

Third Party Notification:

Designating a family member, attorney, or accountant to be notified if premium deadlines are not met. This will guard against the policy being cancelled.

Special Features:

Inflation Protection, Spousal Discounts, Shared Spousal Benefits, Pool of Benefit Days or Dollars, Tax Qualified vs. Non Tax Qualified; and other features to be considered when comparing LTC policies.

Well Defined Benefit Triggers:

All policies contain provisions that determine if and when benefits are payable - these are usually defined as “benefit triggers”. There are three ways to access a Long Term Care policy and each of these should be separate, “stand alone triggers”.

Functional Disability – Access to benefits is most commonly based on the inability of the insured to perform two or more activities of daily living (ADLs). The ADLs are usually bathing, dressing, eating, transferring, toileting, and continence. Research has shown that bathing is often the first ADL that a person is unable to perform. Carefully read the ADL definitions for each policy as there are no industry standards.

Cognitive Impairment – Alzheimer and other senile dementias are among the leading causes of nursing home admissions today. It is important for a policy to include these mental incapacities and that they are stand alone triggers, not linked to any activities of daily living (ADLs).

Medical Necessity – Benefits will be paid if a physician certifies that as a result of an illness, injury or chronic condition, the insured requires medically necessary care and assistance. Since 1997, this trigger is found only in some non tax qualified LTC policies.