COMPARING long-term care insurance (LTCI) policies can be difficult. Given the cost of this type of insurance, especially if purchased later on in life, it is worth the effort to examine what exactly is covered.

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LTCI policies are not standardized, which means that the provisions in each policy may vary considerably. With different provisions come different premiums. To evaluate and compare policies, it is best to understand the provisions and determine if they will meet your needs. Also, consider that the older you are the more expensive the insurance will become.

The first element to consider is the financial stability of the insurance company. You might not need to use the policy benefits for many years, so it is important that the company be financially stable. To find this out, you can review the company’s insurer rating by A.M. Best, which specializes in rating insurance companies. A.M. Best’s ratings can be found at, however you will have to create an account to view this information for free.

The ratings from other services, such as Moody’s or Standard & Poor’s Insurance Rating Services, might be available at your local library. Another source of company information could be their financial statements. If you have the financial knowledge you might read the company’s annual report for further data.

Your family situation, financial circumstances, preferences concerning long-term care choices, and the level of risk you are willing to accept all factor into the LTCI decision. Carrying out the following steps can help you with the process:

• Ask each carrier for an outline of coverage and sample policies. The outline should give you the benefits and policy highlights.

• Research the cost of long-term care in the location you live. If you might be moving, research that area as well because the costs could be higher or lower. Nursing homes, home health care agencies, adult day care and state elder affairs offices can help you determine the costs.

• Once you receive a policy, read the actual provisions thoroughly. Understand each.

• Compare prices for different policies.

• Ask an expert, agent or financial planner to help you decide which policy is the best one for you.

Here is a list of some of the policy provisions you might find and want to have included:

• What are the covered services? Are all types of care covered? This can include skilled nursing, intermediate, custodial, home health and adult day care.

• Is the policy renewable? This needs to be true regardless of the insured’s age or mental condition.

• How is the ability to receive benefits determined?

• When do benefits start? How long is the waiting period?

• How long can benefits be received once they have started?

• How much does the policy pay? Are there minimum or maximum amounts that can be purchased?

• Is there an inflation adjustment for the benefits?

• Is the policy qualified for tax purposes? Is it more restrictive than a nontax qualified policy?

• Would shared benefits be appropriate in your circumstance? Under this type of coverage, married couples, and sometimes other family members, share in coverage limits.

• How are benefits paid? This could be a fixed daily payment. It might be as a reimbursement for the cost of care, up to a daily maximum for a certain setting.

• Are any conditions specifically excluded from coverage?

• Are there pre-existing conditions that are excluded?

• Are discounts available? For example, is there a discount if both you and your spouse buy policies?

You will also want to shop this coverage. Talk to brokers or agents about your needs and which policies might work best for you.

Marc A. Hebert, MS, CFP, is a senior member and president of the wealth management and financial planning firm The Harbor Group of Bedford. Email questions to Marc at Your question and his response might appear in a future column.