Comparing costs of long-term care insurance can be easy for you if you are familiar with the different options and you know what to look for in a long-term care insurance quote.
You may experience difficulties, however, when trying to compare rates of different policies because each company may use different terminology to describe the same benefit. And sometimes the benefit described is not the benefit you think it is.
For example, Genworth may refer to an inflation protection option as Guaranteed Purchase Option (GPO) while Northwestern Mutual may call its inflation protection Automatic Additional Purchase Benefit (AAPB). Meanwhile, John Hancock calls it Benefit Builder. You may be surprised to know that none of these 3 options qualify as Automatic Inflation Protection yet the marketing departments of the insurance companies purposefully choose terminology to sure make these options sound inviting.
Even more challenging for you is when you request quotes and receive various offers for benefits that are not alike, whatsoever.
It is like comparing "Apples-to-Oranges", to use a popular phrase.
Here are some tips to help you compare quotes that may be markedly different.
Is the daily benefit the same?
If all other benefits are equal, the change in premium by either increasing or decreasing the daily benefit is linear.
Thus, the premium for a $150 daily benefit will always cost 50% more premium than a quote for a $100 daily benefit.
Is the benefit period or the "pool of money" the same?
Most policies determine your "pool of money" by multiplying your daily benefit by your benefit period (number of years). Some long term care insurance policies, however, do not use benefit periods to determine the policy benefit limit. These policies may simply sell insurance benefits to you in a fixed dollar amount, i.e. $250,000. It is important to properly compare your policy benefit limit.
Is the long term care insurance inflation protection the same?
Long term care insurance inflation protection is the single biggest factor to understand when comparing quotes.
Many agents may provide quotes for what appear to be low premiums by not including any automatic compound inflation protection; or by only including a Guaranteed Purchase Option (GPO), Benefit Builder or Automatic Additional Purchase Benefit (AAPB) to address future inflation of long term care costs.
Policies with only a guaranteed purchase option (GPO) or no inflation protection may cost 1/2 or 1/3 as much as a policy with automatic compound inflation protection.
Furthermore, the amount of inflation protection within a policy will determine the future value of your coverage, and the resultant premium.
A policy with 5% simple inflation protection may cost 30% less premium than a policy that includes 5% compound inflation. Likewise, a policy with 3% compound inflation may cost 30%-40% less premium than a policy that includes 5% compound inflation.
I understand that for most consumers like you these inflation protection options may be confusing. It is OK. I have even found that most insurance agents do not have a skilled working knowledge of the proper inflation option to elect.
I will help you to understand your different policy inflation options.
In order of your least valuable inflation protection to your most valuable, your quote may contain any one of the following inflation protection options:
Long Term Care Insurance Inflation Protection Ranking
• No Inflation Protection
• Guaranteed Purchase Option (GPO) (AAPB) (Benefit Builder)
• CPI Compound
• 3% Compound
• 5% Simple or Equal
• 5% Compound 2x Cap
• 5% Compound 20 Years Cap
• 5% Compound (Best)
Premiums can vary significantly depending upon which inflation option is included in your quote.
To place your long term care insurance quotes on an even playing field and to avoid being "low-balled" by an agent, I advise you to always ask for at least 2 quotes: one quote with automatic 3% compound inflation protection, and the second quote with automatic 5% compound inflation protection. Inflation protection is critically important, especially if you are age 69 or younger.
**Group policies may not offer any automatic compound inflation protection options. Every individual company will offer you this option, however.
Is Home Care paid out at 100%?
Some quotes you receive will only offer home health care at a reduced payout, maybe 50% of your nursing home daily benefit.
Most group plans automatically reduce the home care payout to 50% or 60% of the nursing home benefit.
If you are like most people, you probably wish to receive your care in your home. Make sure your is for a 100% home health care benefit.
LTC Partner always recommends a 100% home care benefit.
Is the health classification being quoted the same, and the accurate class you may qualify for?
If you have received one quote at “Standard health” and one quote at “Preferred health,” your quotes will be different.
Quotes are not binding, and are not indicative of an offer. An agent can "quote" any health classification it wishes to quote. It has no bearing on your final approved offer.
Is the insurance company being quoted one of the best long term care insurance companies?
A fair premium is important, but just as important as your price is the financial strength and stability as well as a company's experience in underwriting long term care insurance. The best companies will have at least an "A" rating from AM Best.
Current financial ratings of the best long term care insurance companies.
As you can tell, there are many factors that will impact your long term care insurance quote. If you wish, I will provide you with side-by-side "apples-to-apples" pricing of every provider in your State.
With my quote software I can help you quickly compare pricing, features and benefits of the best long term care insurance policies and select the policy that is right for you. We offer illustrations and rate quotes of traditional policies and hybrid long term care life insurance policies. Receive quotes from policies offered through Genworth, John Hancock, Lincoln Moneyguard, Mass Mutual, Pacific Life, Northwestern Mutual, New York Life, State Farm and more.
Simply call me toll free at 1-800-891-5824 or complete my quote request form.