Long-Term Care Insurance Guarantees Explained

Jesse Slome, long term care insurance price and planning expert

Jesse Slome, long term care insurance expert

An increase in consumer inquiries expressing concerns regarding the financial failure of long-term care insurance companies has prompted a special agent training call given by the director of the American Association for Long-Term Care Insurance (AALTCI).

“Media understandably focus on negative stories because it generates attention and the long-term care insurance industry issues have not gone unnoticed,” shared Jesse Slome, director of the national long-term care insurance organization.   ”That has prompted an increase in the number of calls we receive from current policyholders as well as potential purchasers who are asking what happens to their coverage if the insurer goes out of business.”

As a result of the inquiries, Slome shared relevant information with leading long-term care insurance agents.  “This is important information for you to know so that you can address questions you receive,” he noted.  “There are safeguards and guarantees in place that consumers are not aware of and that rarely, if ever, are included in any of the media coverage.”

Specifically, Slome referenced the existence of state guaranty associations designed to protect individuals in all 50 states and the District of Columbia who have purchased life, health and long-term care insurance policies in the very rare instance that an insurance company goes out of business and is unable to pay claims.  “It’s a shame that the existence of this important protection is the best kept secret, but when concern rises, it’s an important time to understand how the program works.”  Each State has an individual state guaranty association designed to cover policyholders who are residents in the state.

Slome shared information from the National Organization of Life & Health Insurance Guaranty Associations (NOLHGA www.nolhga.com).   “The guaranty association coverage limit for long-term care insurance benefits is now at least $300,000 per-covered policyholder in all states,” notes Sean McKenna, NOLHGA’s director of communications.  Slome explained that was the maximum benefit a policyholder would receive under the State Guaranty Association laws in those states should their insurer fail.

A recent consumer question was also discussed during the presentation.  “In this instance, the policyholder had an unlimited or lifetime long-term care insurance policy and was already receiving benefits,” Slome explained.  According to NOLHGA, benefits paid up to the date when the guaranty association is ‘triggered’ would not count against the $300,000 in the guaranty association (GA) coverage.  “Indeed, in such an instance, the person already on claim would be eligible for continuing coverage of contract benefits up to the entire $300,000 of GA coverage,” McKenna stipulated.

Slome encouraged Association members to educate their clients and prospective buyers to the fact that insurers do pay claims,  “One of the misperceptions held by many is that insurers deny claims or fail to pay them, something that is patently false,” Slome stated.

The organization is presently conducting a study of claims that will be published later this year.  “We are hoping many of the top insurers will take the time to share information on this important topic.”

Consumers and insurance agents who want to learn more about long-term care insurance costs and planning options can call the American Association for Long-Term Care Insurance at 818-597-3227 or visit the organization’s website at www.aaltci.org to find and connect with local LTC insurance professionals.

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