Frequent readers of our column know that we're generally advocates of purchasing long-term care insurance if it makes financial sense within the confines of plan for retirement.
One common rule of thumb for purchasing LTC insurance is to do so when you're in your mid-50s. This gives you the opportunity to invest in a policy while you're still relatively healthy, thereby allowing you to potentially qualify for good health discounts. Buying LTC insurance sooner than later also protects from the possibility of being denied coverage if you develop a significant health condition.
Unfortunately, we've worked with clients who have tried to purchase LTC insurance only to find out that they've been denied coverage. Typically, if you've been denied coverage, it probably means there are some health issues at play. If that's the situation, consider doing the following three things.
Continue to Shop for Another Policy
If you used an insurance agent to help you shop for LTC insurance, it's possible that they may have only been able to offer you proprietary policies. This means that your ability to qualify for a policy may have only been shopped through a single company.
ADVERTISEMENT
That's why it's a good idea to work with an independent LTC agent or with an independent financial advisor that can shop for a policy across a broader spectrum of the LTC marketplace. It's possible that your health may be good enough to qualify for a policy from a different company.
Look into a Hybrid Policy
You may also want to look into purchasing a hybrid policy that combines life insurance with LTC insurance. The policy has a death benefit like traditional life insurance, but it can also have its face value turned into payments for LTC. In other words, if you wind up needing LTC, the death benefit is reduced in order to finance your medical expenses, but if you end up not needing any LTC, your beneficiaries will receive the full death benefit.
There is an important caveat that should be addressed for hybrid policies. Hybrid policies typically don't qualify for state LTC partnerships. These partnerships, including the partnership in Minnesota, allow the benefits on a LTC policy to increase the amount of assets that are exempt when qualifying for Medicaid for medical assistance. In other words, if you buy a LTC insurance policy that pays $100,000 in LTC benefits, you can protect $100,000 of your own assets if you need to apply for medical assistance.
Try Applying Again in a Few Years
It's possible that you were denied coverage because of a recent health issue. If the health issue goes away, or if medication is able to treat your health condition, it may mean you'll be able to qualify for coverage in the future. We've had a number of clients over the years who had been previously denied coverage because of a health condition, only to have their health improve to the point that they became eligible to purchase LTC insurance.
Purchasing LTC insurance is just one element of LTC planning. Even if you aren't able to purchase a policy, there are additional strategies-including estate planning and the transfer of certain assets-that everyone should consider using, whether you qualify for LTC insurance or not.
Bruce Helmer and Peg Webb are financial advisers at Wealth Enhancement Group and co-hosts of "Your Money" on KLKS 100.1 FM on Sunday mornings. Email Bruce and Peg at yourmoney@wealthenhancement.com . Securities offered through LPL Financial, member FINRA/SIPC. Advisory services offered through Wealth Enhancement Advisory Services LLC, a registered investment adviser. Wealth Enhancement Group and Wealth Enhancement Advisory Services are separate entities from LPL Financial.
