Insurance World

Kids today face an ever growing number of temptations ranging from drinking and smoking, drugs, gambling and pre-martial sex. Unfortunately, due to their youth and inexperience they fail to realize that what they do in their youth can have a great effect on their quality of life as they grow older.

On the other hand, as people grow older and approach retirement age they begin to realize that the carelessness of their youth did have a profound effect on the quality of their life but now they are ready to do whatever it takes to remove as much risk as they can. As a result, an ever increasing trend has been the purchasing of long term care health insurance as one way of reducing the financial risk a prolonged illness poses.

Long term health insurance is one the best ways to reduce whatever fears you may have in terms of how you’ll be able to take care of your health after (and in some cases at a much younger age if you are the victim of an untimely accident) retirement as well as ensure your family (your spouse, children and even your grandchildren) that they won’t get saddled with the potentially huge amount of debt that can result from the high-cost of medical care. Long term care health insurance is one of the best ways to guarantee that not only will you receive higher quality care but that you won’t lose a lifetime worth of savings in the process.

Because health care costs continue to rise at dramatic rates nearly every year, it’s becoming increasing advisable to begin coverage much earlier in life. Traditionally, individuals wouldn’t even consider long term care until nearing retirement or even until after retirement but you may want to reconsider your thinking if that’s been your plan. A few big reasons you may want to consider looking into long term care health insurance as early as your mid 50’s are premiums and approval. Policies taken out when someone is in their early 50’s (this is still seen as a favorable age group ) is much less expensive then one initiated in their early to mid 60’s and the older you get the higher the premiums.

However, if you take out a policy when you are younger you will continue to pay the same premium even as you get older. Sure, you may pay for 10, 15 or 20 years before you need it but when you do need it you’ll have much better coverage.

Another big reason you may want to consider taking out a policy earlier in life is that you greatly increase your odds of getting approved with no riders or other exclusions. Once you get hurt or sick and realize you need long term health insurance then it’s too late to get coverage because no insurance company will issue you a policy - at any price.

If you’re currently a little older and you have other income besides your Social Security benefits or Supplemental Security Income (SSI) and you absolutely have no trouble paying for your daily needs and all your monthly expenses then you should definitely look into a long term care health insurance plan.

Once you make the decision to look into purchasing a long term care health insurance plan you need to be aware that whatever company you talk too will assess your health and you current state of life before issuing you a policy. That will assess your ability to handle the Activities of Daily Living (ADL).

These so-called Activities of Daily Living are activities like: taking a bath, continence, dressing yourself, eating by yourself, going to the toilet (without any help from others) and getting yourself in and out of bed. If you can’t most if not all of these activities you change of getting approved and a policy issued is greatly reduced.

On the other hand, different companies use different approval criteria and there are different types of policies you can apply for. Some policies are geared towards home health care or having a personal home nurse while others are designed for care to be received while staying in a long term care facility. You will be given the option to choose the type of plan you would like when you apply but like most things, you pay for what you get and different plans come will different price tags. Just make sure you thoroughly understand all your options first and if you feel pressured and uncomfortable then politely move on to the next company to apply.

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I admit it. I’m a Letterman fan. When Johnny Carson retired from the late night scene, and Letterman and Leno moved to late night center stage, I channel surfed right over to Dave. And, I’ve been there ever since. I usually fade to black somewhere between the monologue and “Will it Float?” But, when I do manage to stay awake a little longer I really enjoy Dave’s Top Ten. So, I’ve been working on my own Top Ten. My Top Ten isn’t funny. But they could just save you a bunch of money if you’ll take them to heart. These are the Top Ten mistakes I see consumers make every day when considering a life insurance purchase.

Blunder #1 - Taking the cheapest quote at face value…

There is no way to get quality low-cost life insurance, appropriate for your needs, without giving it some serious thought and going through the underwriting process. Just because some agent on the other side of the country emails you a cheap quote does not mean that you will get the quoted premium. These quotes are always based on “best case” underwriting. Less than 10% of applicants qualify for the preferred best underwriting classification these quotes are based on.

Blunder #2 - Asking for a quote from multiple web sites…

A computer generated quote can be a good starting point to your search for cost effective life insurance. And, if you are totally honest about your physical condition, medical history, and hobbies, you may get a pretty good idea of what your premium will end up being. But, if you choose to use one of the dozens of “free quote” services, plan on getting 5 or more phone calls from insurance agents. These services make their money by selling leads. And, you become a lead by keying in your information. Leads generally cost between $10 and $20, whether or not you buy anything. And, the lead companies often sell your information to 5 or more agents. I’ve known clients who have asked for quotes from 2 or 3 sites and gotten 15 or more phone calls.

Blunder #3 - Buying permanent insurance when term is more appropriate…

The fact is that insurance agents can usually make more money by selling you a whole life or universal life product than a simple term policy. “If” these products are the right products for your needs - ok. But, often they simply are a bad fit. It all depends on why you are buying life insurance and how long you expect to need it. An insurance agent’s job is to identify the right insurance product, and get you the best possible value. If you suspect that your agent is more interested in making money than helping you, fire him or her. And, hire someone you can trust. One more thing, if some slick operator does manage to twist your arm. You always have 10 days, after you receive the policy, to cancel for any reason. The 10 day “free look” is the law.

Blunder #4 - Working with a captive agent…

Competition drives down prices. It’s a fact. But, many large insurance companies hire “captive” agents. These agents can only sell their employer’s products. So, when you ask a captive agent to give you a quote you get a quote from their company. Independent agents don’t work for the insurance company. Their job is to help you find the best possible carrier and product for your need - period. If you have a captive agent you really like, you owe it to yourself to get a quote from an independent agent as well.

Blunder #5 - Procrastination…

Nothing good can come from delaying a life insurance purchase. If you develop an illness, your premium could go through the roof. Or, worse yet, you could simply be declined for insurance altogether.

Blunder #6 - Buying life insurance at work….

By all means take the life insurance your employer offers as a free benefit. Free is the absolute best deal you can get. But, if you are in good health, the life insurance you buy through your employer is almost certainly one of the most expensive purchases you will make. So, again, it depends. One thing for certain, you won’t get level term from work. So, your premium will likely go up every year.

Blunder #7 - Buying the options….

Riders, like Return of Premium rider (ROP), are very popular with insurance companies and with agents alike. These “options” inflate premiums and commissions significantly. But, usually, they just don’t make good financial sense. The pitch may be compelling. But, take time to think it through before you check the riders boxes. And, definitely read the small print when your policy arrives. Remember, the 10-day free look is the law. It’s your right to return the policy within ten days of receipt even if you just don’t like the color of the paper it’s printed on.

Blunder #8 - Buying insurance just based on ratings…

It’s important to consider the AM Best (www.ambest.com) and/or Standard and Poors (S&P) ratings for any insurance company from which you are considering purchasing a policy. Financial ratings are an measure of the viability of the firm. And, you don’t want to buy from a “here today gone tomorrow” carrier. But, ratings are not the whole story. Some companies just plain have poor service. This is one more area that a good agent can help you sort out.

Blunder #9 - Sticking with an old policy…

The insurance business is highly competitive, and insurance companies are constantly adjusting their rates. It’s not at all uncommon to find that you can replace an existing policy and save money on your premium. It pays to shop around. Maybe your current carrier is the company you shouldn’t keep.

Blunder #10 - Failure to exercise patience…

Let’s say you found an agent you like, and he or she helped you wade through the carriers and their offerings. You worked out the right amount of coverage, the right kind of insurance, and you have a pretty good idea where the underwriter will rate you. You completed an application. The paramedic showed up at your office, took a sample, weighed you and got the answer to a bunch of questions. The application is “pending.”

A couple of weeks go by and you hear nothing. This is the point where you need to exercise maximum patience. From here the process typically takes four to eight weeks. If the process drags on call your agent. If it takes longer than eight weeks, you may want to move your application to a different carrier. There’s no excuse for poor service.