Take a hard look at long-term care insurance and the possibility of it lapsing.
In a previous post, I shared my father Rusty’s experience with long-term care (LTC) insurance. He purchased a policy when he was almost 65 years old. Ten years later, he was diagnosed with prostate cancer. Sometime around age 85, he started analyzing how much he was paying for all his coverage – Medicare, a retiree plan, and LTC policy – and determined that he was over-insured. He didn’t need the LTC policy, he thought, because Medicare and his retiree coverage would take care of him, a common fallacy. So, he quit paying the premiums.
Going through the mail one day back then, I found the insurance company’s letter notifying my father that the policy would be canceled in three days. Because of my intervention, Dad paid the premium and the policy continued. Three weeks later, after a significant change in condition, he was in a LTC facility.
I’ll use his case study to share some important information for anyone who has older parents with LTC policies.
Failing to pay premiums leads to a lapse in coverage, basically, going from having the insurance to being uninsured. A lapsed LTC policy will not pay for any LTC care benefits.
One study found three reasons why people let their policies lapse.