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Response to "Surprise! Your Long-Term Care Insurance Won’t Cover It"


This very unfair and uneducated article was written by a financial planner. My take on it is his agenda is to sell individual long-term care insurance by bashing group LTCi plans. You can read it and see what you think. Here is my response. Just as in any other response I write, please feel free to use any part of it in any response of your own with your clients and prospects.

As a national long-term care insurance consultant for 25 years and the company that conducted the employee education for the Federal government's group LTCi program, my observation is the author is attempting to sway consumers toward individual LTCi policies. Group policies can be just as good and they are certainly portable at the same premium and benefits. To respond specifically:

  1. the pre-requisite for a nursing home or hospital stay was removed in 1991;

  2. only one policy didn't pay for room and board in an assisted living facility and it quickly failed due to the outcry from the industry including myself;

  3. assisted living is more often paid the same as nursing home which is overkill in my opinion as it typically costs about 75% of what a nursing home costs; e.g. $4500 a month for ALF vs. $6000 for a nursing home;

  4. access to benefits is federally controlled by HIPAA eff. 1/1/97 in order for benefits to be tax-free so group policies have to adhere to claims payment when one either needs help with at least 2 activities of daily living or has a severe cognitive impairment;

  5. the ADL's are bathing, dressing, transferring, toileting, continence and eating, not shopping and meal preparation;

  6. Group contracts can be either daily or monthly benefits and typically have a 3 or 5 year benefit period, just like individual products although the Federal employee's group plan has an unlimited option. One of the most popular group contracts going back to 1987 has always been monthly (UNUM);

  7. Many older individual policies excluded mental & nervous but all policies have covered Alzheimer's and other dementias for many years;

  8. some group policies still allow new hires to enroll so they aren't a total closed block; and

  9. I agree with the author that a weaker point of group LTCi plans has been the inflation that allows one to buy more coverage at older ages; however most group plans have allowed an automatic benefit increase at the policyholder level.

Finally, is LTCi worth it? Generally, a 50 year old will put in about 10% of premium over 30 years vs. the benefits available at that time so the reader can decide. Group or individual plans are subject to class rate increases, but what other insurance product doesn't go up over time? There's a big difference between paying 10% vs. paying the whole thing at anywhere from $6500 a month today to $30,000 a month in 30 years. And if you don't need it? Praise God you didn't have a stroke or Alzheimer's. Many people wish they could say that.

Phyllis Shelton


LTC Consultants provides long-term care insurance training to agents and educates consumers with information about long term care insurance. This website contains reports and articles about caregiving, assisted living, nursing homes, aging, senior living and elder care, home health care and other long-term care related articles. Order Phyllis Shelton’s Protecting Your Family with Long-Term Care Insurance with articles about whether or not to self-insure or buy combo life insurance and annuity policies or a traditional LTC insurance plan. The book also contains ideas for people who don't qualify for LTC insurance such as Medicaid, life settlements, reverse mortgages, critical illness and also contains in-depth information about Medicare, Medicare Advantage and Medicare Supplements.


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