Group and Sponsored Long-Term Care Insurance

Although there are some people who can benefit from group coverage, more often than not, individually issued policies are almost always a better value.

Disadvantages of Group LTC Insurance

Many of the basic factors that affect the premium of individually issued long-term care insurance are also true with group LTC insurance. However, group LTC insurance has some distinct disadvantages:

1. Little or No Education About Long-Term Care:

The issues surrounding long-term care and LTC insurance can be complicated to understand. Without a basic education that explains these issues, the chances of purchasing coverage that is appropriate for you are pretty slim.


2. Normally uses a Cookie-Cutter Approach:

In order to assist agents in making sales, insurance companies usually narrow the benefit choices to a few simple options. This makes it difficult to obtain customized coverage that addresses your unique situation.


3. Normally More Expensive:

Unlike other types of group insurance coverage, group LTC insurance is normally MORE expensive, not less expensive, than individually issued coverage.

Group coverage is expensive due to a problem called Adverse Selection : Group coverage allows the issuance of coverage to individuals who would not normally pass typical underwriting requirements. The end result is a substantially higher number of claims, with healthy policyholders subsidizing the current high premiums as well as any premium rate increases. For healthy people, individually issued coverage results in a better value than a group policy.

One Advantage of Group LTC Insurance

There is one situation where group long-term care insurance is worth considering. If your health is not good enough to qualify for individually issued coverage, you may want to consider any group coverage available to you.

In this situation, you would still want to work with an LTC Planning and Insurance expert to weigh the pros and cons of the coverage, and to assist you with evaluating your options.

Sponsored Long-Term Care Insurance

Sponsored LTC insurance use the same stringent underwriting guidelines as individually issued policies, so are not subject to the adverse selection problems of group LTC insurance. This means that sponsored LTC policies are also a better value for healthy people than group policies, but they still almost always fail to offer the best overall value.

Disadvantages of Sponsored LTC Insurance

1. There is only one insurance company sponsoring the program

This limits the coverage options available to you. A plan offered by another carrier may offer options that are more appropriate for your situation.

2. Advertised discounts may be a marketing gimmick

In reality, the discounted premium may be higher than the normal premium rate with an alternative insurance company.

3. Little or no education about long-term care

The issues surrounding long-term care and LTC insurance can be complicated to understand. Without a basic education that explains these issues, the chances of purchasing coverage that is appropriate for you are pretty slim.

4. Coverage often offered by insurance company directly

Buying directly from the carrier saves no money, and leaves you to deal directly with the company at the time of claim, instead of having an unbiased service representative to assist you with your clients.

One Advantage of Sponsored LTC Insurance

There is one situation where sponsored LTC insurance is worth considering: When the employer, association, or other organization uses the services of an LTC Planning and Insurance expert. In this situation, you may get the best of both worlds:

• The ability to choose coverage among several top-rated insurance carriers.

• The advantage of having your LTC plan and policy design customized for your own personal and financial              objectives.

• The possibility of receiving a 5% - 10% discount on the premium