Know Your Policy…

Basic 101 in LTCI policyholder (PH) management. Sounding pedantic in this piece, yet still important since there is a certain Play By Rules in effect. Without a base of knowledge of essential policy info in discussions with others — mere “noise”.

If you’re the PH (the Insured) or acting on behalf of (e.g. Power of Attorney, Estate Administrator, or otherwise given right to act): find the policy and especially note the cover page that lists essential information:

  • policy number & plan number;
  • covered services & benefits at the time policy was taken;
  • inflation protection;
  • whether the plan is a Partnership policy or not;
  • elimination period, expressed in days normally no greater than 100 days
  • Riders, many types of
  • Marketing material

Additional correspondence with your carrier since policy was taken, such as benefit upgrades / downgrades; premium change notifications; claim activity (acceptance or denial).

Updated contact information is vital. Carrier phone numbers found within the contract may have changed. Call your carrier once in awhile to see who answers & how well they handle a key question. What’s a key question? Hmmm.

Have there been or are there currently any actions taken against your carrier that can affect your status or outlook on your LTCI? Presently, there is one pending v. GE / Genworth for those PHs to note and a case of general interest to any PH.

Having this information readily available enables one to Act. Without essential information it is very difficult to communicate to carriers, DOI, advisors, or any other participant on an issue. For examples, an official complaint about your contract to CT DOI requires the Policy number.

I have personally found the interaction to go smoothly with (my) carrier once this information is available & I have familiarized myself with its contents. I have reached 3rd level support successfully on a matter of some complexity.

One of the more difficult aspects in LTCI is your plan’s design. You may recall when you took LTCI out in the beginning (maybe some 20 years ago), there were many design choices, such as : Maximum Daily Benefit (choices different for nursing home v. home care); % inflation protection (compound, simple, none); elimination period; years of coverage (affecting the Lifetime Benefit max). Are the design parameters are still relevant given your current health & financial state? It may be that your plan is over-configured and you are paying excess premium & are too exposed to rate increases. You can potentially downgrade coverage but you should seek advice first. Does the carrier have an LTCI agent that can help explain options, whether or not a trusted source for advice?

One of the more curious changes that has occurred relates to (CT) Partnership minimum contract specifications – the % compound inflation of benefits. For most reading this, yours is probably 5% but now Partnership is 3% and has had stops in-between (e.g. 3.5%). Something squirrely about the reduced % since these values are intended to represent fixed long-term % rise in LTC costs. If your contract is 5%, does the current 3% suggest your plan is over-configured because the 5% overstates the long-term LTC cost of services inflation? Take my opinion as a salt-grain: I don’t think so. Flipping the question — is a contract with a 3% compound inflation potentially under-configured long-term? I would like an expert opinion to justify the reduction of 5 to 3% since the 20 year average still remains ~5% despite recent 5-year period where it is close to 3%.

What options can you exercise with respect to your policy? The contract should specify these and are important to know.

Here’s a link that seems relevant to all PHs but requires significant reading & interpretation. There’s more underlining than not so it takes some effort to dissect that meaning.

The key question for most on this blog — this was signed off June 24, 2009, does the non-forfeiture benefit (incl. CBUL) apply to policies prior to that date? If the answer were yes, is the wording so clear as to determine how it would apply in your case? If the answer were no, why are pre-2009 policies excluded? What precipitated CBUL in 2009 and not before?

Author: Samuel Cuscovitch

Research scientist / strategist.

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