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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“Each state and the District of Columbia maintains a State Guaranty Association that protects consumers in case an insurance company fails,” explains Jesse Slome, executive director of the American Association for Long-Term Care Insurance http://www.aaltci.org.  “In fact most states have two entities, one that protects life and health insurance products and one for property and casualty lines of business since each is quite different.”

Consumers are protected at levels set by the State with levels generally ranging from $100,000 to as much as $500,000. 

The insurance associations operate differently than the FDIC which assesses each bank a regular ongoing fee.  “That cost of the FDIC fee is actually borne by bank depositors as a fee they don’t see but definitely pay for,” Slome explains.  “The State Guaranty Associations do not collect regular fees but rather only assess a fee when an insurance company fails, which is a fairly rare occurrence.”

In the case of an insurance company failure, all remaining insurance companies that operate in the state are assessed the necessary fee to protect policyholders of the failed company.  “They must pay the fee to protect the consumers,” Slome adds. 

A new online directory which explains insurance company limits for each of the 51 State Guaranty Associations as well as website and phone contact numbers has been created by the American Association for Long-Term Care Insurance.  It can be accessed online at http://www.aaltci.org/guaranty. 

“Consumers should be aware that these valuable protections exist,” Slome explains.  “It is a question often asked by those looking into long-term care insurance planning.”

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