Cognizant Wealth Advisors occasionally publishes guest blogs on our site.  Today’s guest blog was written by Allen Hamm, president of Superior LTC, a company that helps people plan for long-term care.  He can be reached at 800-400-0577 or at info@superiorltc.com.  Note that any opinions expressed in this article do not necessarily reflect the opinions or views of Cognizant Wealth Advisors.

Whether or not to own long-term care (LTC) insurance is personal to each individual and family.  The most effective way to decide on your best option for dealing with the possible need for long-term care is to enlist the services of an objective financial advisor (a fee-only advisor) who’s not compensated based on the ultimate decision you make to buy coverage or not.  Objective financial advisors have no hidden agenda.

If you decide to purchase LTC insurance, work with an agent that is referred to you by your fee-only advisor.  And only consider LTC insurance that’s “endorsed” by the state you live in.  In California this starts by asking the agent that you’re working with if he or she is approved to offer “Partnership LTC insurance.”  In order to discuss state-endorsed policies, agents must go through specific additional education and training.  This extra effort is a process that many agents decide not to go through because it’s time-consuming.  But Partnership policies offer a couple of distinct benefits:

• An asset protection component that allows the policyholder to potentially shield some of his/her assets by using the Medicaid (MediCal in California) program earlier than normally allowed.  Most Partnership policies offer a “dollar for dollar” protection component. This means that for every dollar paid out in benefits from the policy, the policyholder can protect a dollar of assets.  As an example, if a person buys an LTC insurance policy with total benefits worth  $500,000, and subsequently uses up the $500,000 due to a protracted need for long-term care, he or she could then access benefits through the Medicaid program while at the same time keeping  $500,000 in assets, rather than having to deplete his/her assets before being able to get help from the government.
• An extra layer of protection against frequent and drastic rate increases.  In order to raise rates on Partnership policies, the insurance company must not only request approval from the state’s insurance department for a rate increase, but from the state’s health department as well.  This extra step has turned out to be a powerful constraint on policy rates.  In California, no Partnership policyholder’s rates have ever been increased, mostly because of the Department of Health Services’ refusal to approve.  While this is not a guarantee that rates will never increase, it has been shown to effectively limit the frequency and size of such increases as compared to traditional LTC insurance policies.

Partnership policies are the best choice if you need LTC insurance.  Make sure you work with an agent that is qualified to sell them.