Long-term care (LTC) insurance is an important issue. However, making matters harder for many seniors is the prospect of long-term care insurance fraud.
The Street’s recent article entitled “How to Protect Yourself and Your Family From Long-Term Care Insurance Scams” say this is a major issue with the skyrocketing costs of long-term care services and the growing need for long-term care financial help. LTC insurance fraud comes in many types:
Faulty policies: Unsuitable LTC policies can favor maximum profit over a senior’s specific health care needs. These policies may have super-high premium costs, and insurers that try to sell two overlapping long-term care insurance policies when one is enough.
Upgrades: Scammers will try to "churn" a LTC customer, by asking them to cancel their current policy and sign a new, more expensive one that offers nothing better than the old policy. This is really poor because when an existing insurance policy ends, the premiums paid out on the old policy are forfeited. A senior’s pre-existing conditions that weren't considered under the old policy may also increase the price on the new policy.
Phony policies: Criminals may also try to attempt to sell seniors fake policies that accept the customer's premiums, but don't pay out any cash when the insurance is needed in the future. LTC insurance consumers should always monitor the state's insurance department to validate an insurer, before signing up and be certain that the company is licensed to sell insurance in the state.
Falsely representing benefits. LTC insurance scams also can have other traps that can result in non-coverage. LTC insurance fraud can include fraudulently representing the benefits of a policy and high-pressure tactics to force seniors into purchasing expensive policies.
To thwart this LTC insurance fraud, seniors and family caregivers can join forces and think like a team to be informed about long-term care decision making.
Family discussions are a good idea, but also think about a third-party facilitator to help remove any politics and keep the conversation focused on the financial health of your parent.
Create an effective, sustainable LTC strategy, whether on your own, or in a family setting, by being aware of fraud.
If you would like to discuss your options with an estate planning attorney in Jupiter, Palm Beach Gardens, or Naples, Florida, schedule a complimentary call with Edward J. Welch at Welch Law, PLLC.
Reference: The Street (May 15, 2020) “How to Protect Yourself and Your Family From Long-Term Care Insurance Scams”