Will Your Health Affect Your Ability To Buy A Long Term Care Insurance Policy?

Insurance companies that sell long term care insurance medically underwrite policies before they are issued. To do this, they take a close look at your current health and your health history before they decide to issue your policy. You may be able to buy long term care insurance coverage through an employer or another type of group, such as an association like AARP, without answering any health underwriting questions or, at least, with a less thorough set of questions on the application.

Insurance company underwriting practices affect the premiums they charge you now and in the future. Some companies do what is known as “short-form” underwriting and only ask you a few questions about your health on the insurance application. For example, they may only want to know if you have been in a nursing home or assisted care facility or received care at a nursing home or assisted care facility in the last twelve months. They do not ask any specific health questions. With a simplified application like this, the company may not offer quite as much in the way of benefit levels or benefit options because the limited questions create more of a risk.

Post Claim Underwriting

Sometimes insurance companies do not check your medical record until you file a claim. Then they may try to refuse to pay benefits because of information found in your medical records after you filed your claim. This practice, called post claim underwriting, is illegal in many states. Companies that thoroughly check your health before selling you a policy are not as likely to engage in post-claim underwriting because they learned most, if not all, of your medical history prior to issuing your policy. Therefore, they can find nothing to allege that you did not tell them.

Sometimes the insurer has an opportunity to learn more about your medical history based on the information you provided on your application, but chooses not to further investigate. In that case, the company cannot then later deny your claim or rescind, cancel, your policy based on information it learns about when it investigates a claim. If, for example, you list on your application the name of a particular medical care provider and the insurance company fails to contact the provider, any adverse medical history contained in that provider’s records may not be used to cancel the contract.

Some insurance companies do extensive underwriting. They may ask more questions, look at your current medical records, and ask your doctor for a statement about your health. As a result, these companies may insure fewer people with health problems. If you have certain conditions, such as Parkinson’s Disease or the onset of Alzheimer’s Disease, that suggest you may soon need long term care , you probably won’t be able to buy coverage from these companies.

Regardless of how a particular company underwrites, you must answer the questions it asks and uses to decide if it will insure you. When you complete your application, or have an agent complete it for you, be sure all questions are answered correctly and completely. The insurance company depends on the information you provide on your application. If that information is wrong, and the insurance company learns about it, usually when you file a claim, the company may decide to rescind, or cancel, your policy and return the premiums you have paid – and, of course, deny your claim. The company only has the right to take this action within the first two years after your policy is issued. After that, it can only cancel your policy by proving fraud on your part.

Most states require the insurance company to give you a copy of your completed application when it delivers your policy. At this time, you should review your answers again – especially if the application was completed on your behalf by an agent, and you should keep the copy of the application attached to your copy of the insurance policy.

Pre-Existing Conditions

A long term care insurance policy usually defines a pre-existing condition as one for which you received medical advice or treatment or had symptoms within a certain period of time before you applied for the policy. Some companies look further back in time than others. That may be important if you do have a pre-existing condition. If a company learns you did not tell them about a pre-existing condition at the time of your application, the company might not pay for treatment related to that condition and might even cancel your coverage. A company can usually do this within two years after you buy the policy, or later, if it can show that you intentionally misled the insurance company by withholding the information.

Many companies will sell a policy to someone who does have a pre-existing condition. However, the company may exclude long term care coverage related to that condition for a period of time after the policy goes into effect, usually six months, though some companies have longer pre- existing condition exclusion periods while others have none.

Case Studies: Long Term Care Insurance and Health Considerations

Case Study 1: Short-Form Underwriting

John applied for long term care insurance through a company that utilized short-form underwriting. The application only asked a few basic health questions, and John was able to secure coverage without disclosing extensive health details. However, due to the limited underwriting, the policy offered less comprehensive benefits and options.

Case Study 2: Post-Claim Underwriting

Sarah filed a claim under her long term care insurance policy after needing assisted care. However, the insurance company engaged in post-claim underwriting and discovered information in her medical records that she hadn’t disclosed during the application process. As a result, the company attempted to refuse paying benefits, raising legal concerns about the practice of post-claim underwriting.

Case Study 3: Pre-Existing Conditions

Michael had a pre-existing condition when he applied for long term care insurance. The company decided to offer him coverage but excluded coverage related to his pre-existing condition for a specific period after the policy went into effect. This exclusion period raised questions about the fairness and implications of pre-existing condition clauses in long term care insurance policies.