Studies show a rising number of people will enter a long-term care facility at some point in their lives, often at a younger age than they expect. Many more will require the help of medical personnel in their homes. Either way, the costs range from expensive to insurmountable. That’s where long-term care (LTC) insurance becomes valuable. While no policy is likely to cover all the costs, it can help. That is, unless a scam artist sells you a worthless policy.
Insurance companies have become stricter about who they will insure, and what treatments they will cover. This makes seniors who are looking for LTC insurance an even greater target for fraud. Sales representatives selling fraudulent policies feign sympathy with those who have not been able to get coverage, or who can’t afford the premiums. The appearance of sympathy helps them pull the wool over the eyes of trusting consumers.
In other cases, consumers already have LTC insurance policies, which they may have been paying on for years or even decades. But… who doesn’t like a better deal? Scam artists may specifically look for people who are already covered and then sell them alternate policies or supplemental policies which, they say, are more affordable.
It isn’t until claims are filed — and unceremoniously denied — that victims generally realize they’ve been duped.
Here are some of the reasons given for denial of claims under bogus policies:
- The care was performed by an ineligible provider.
- The provider did not document the care to the satisfaction of the insurer.
- The benefits are not payable because the insured is in an assisted living facility.
- The insured was not in need of help with more than two activities of daily living.
- The policy lapsed.
Scams Have Various Flavors
According to the Coalition Against Insurance Fraud, bogus policies take many forms. Unscrupulous salespeople may:
- State that an LTC policy will cover all of a consumer’s needs.
- Attempt to scare consumers by telling them that, without this coverage, they will surely become financial burdens on their families.
- Sell policies that the representatives know are too expensive for the consumer.
- Sell expensive overlapping policies when only one policy is needed.
Protect Yourself and Your Loved Ones
What can you do if you’re approached by someone offering a replacement policy?
Resist pressure and get a second opinion, advises the Coalition. Scam artists are generally pushy and impatient. They want you to sign a contract before you have a chance to realize you are being scammed. They may work alone or in small groups, may have trouble explaining terminology if you ask questions and overall, they may seem inexperienced.
Know this: In some states, you can cancel a policy within 30 days and receive a full premium refund. This is known as the “free-look” period. If you decide to cancel, notify the company by certified mail so you can prove the date of cancellation. And keep copies of all related documents. Again, laws vary by state, so don’t assume you have this option until you are sure.
If you are in the market for LTC insurance or want to change your policy, check with your state insurance department (http://www.naic.org/state_web_map.htm) to find out if the company is licensed. Even if it is, you need to know the insurer is financially healthy. You can find this out by logging onto A.M. Best (ambest.com) which lists financial ratings of insurance companies. Make sure the company has been around awhile and has a good reputation. However, be aware, not all LTC insurance scams are criminal in nature. A company may be legitimate, but have overzealous agents who take it upon themselves to sell more LTC insurance than is needed. At the very least, get a second opinion.