Treading Carefully

Dear Jewish Fairy Godmother:

A friend’s son is selling insurance. He’s new at it but is a charming kid
with the gift of schmooze, so in his first year he won a company-
sponsored vacation, which means he’s among the 100 best in the US.
I like him but am happy with my current insurance, so I asked him to
quote on long-term care, warning him up front that I wasn’t sure if I
would buy it. We agreed that the interview process would be good for
him and my eventual acceptance or rejection on medical grounds
would be informative for me. Surprisingly (I am a diabetic on high
blood pressure meds), I was approved. Now I’m dealing with a ticking
clock (30 days to sign and bind) and policy language that would choke
even an attorney. I know because I passed the contract to my lawyer
brother, who identified some very bad (for me) clauses, depending on
how they’re interpreted. I’ve also been told by several people of a
better company, though they are a little more expensive. I don’t want
to lose the friendship, but this decision is in $4-6K annual range for
me, so I am not undertaking it lightly.

Treading Carefully

Dear Treading:

Among the most important things to remember when buying insurance
is that the salesperson is neither the underwriter nor automatically
your advocate in a claims situation. When you buy car insurance,
your agent’s number is generally on your proof of insurance, but
bodies are different. So while I’m happy that your friend‘s son is both
a good kid and a success, the devil is in the details. You will need to
get down into the weeds of the policy language before you make this

Here’s an illustrative, but by no means definitive, list of issues to
consider. How many hours a day of care are you paying for? Usually
policies are denominated in dollars per day but you can translate that
into a percent of a day. Do you want to ensure twelve hours a day?
More? Less? Does the policy have an inflation rider? Depending on
your age that alone could be the most important question. Today’s
dollars and dollars when you’re in your 70’s/80’s are not worth the
same. Will it allow you to choose care at home or only in an
institution? Who decides who the provider is? If your
spouse/partner/fried were a certified caregiver, would you have that
choice, or must you go through a company? Who decides on the care
plan? If you are paying for, say twelve hours a day of care, but only
use six, is the monthly benefit reduced by 1/30 th for a day’s care or
1/60th? Can the company change policy language without your
approval after you’ve signed ? Can they raise rates: how often and
how much? What’re your options if they do? What if you pay the
premiums and die suddenly without using care, or have only used a
small portion of your benefits pool; what happens to the rest of the
money in your account?

That’s a fraction of the issues involved. Work to ask for changes to the
language, and be careful that it be signed by a company rep who is
legally allowed to do so (not the sales kid). The clock may be ticking,
but if you qualified you might do so again with this company or with
another. Don’t throw away your money on the wrong insurance. All of
that said, everyone I know who has had parents with long-term care
insurance has praised its value.