The Insurance Dilemma

Submitted by Chris Thomas on Sun, 05/01/2022 - 12:46

I just paid a few bucks shy of $3,000 for my long-term care insurance policy, a painful annual ritual that I haven’t managed to get used to, even after more than a decade.

I did lots of research and purchased the policy when I turned 50 and my mom, seen with me at left, was clearly suffering from some form of dementia. I figured if I qualified for a policy before she was “officially” diagnosed, there would be no reason an insurance company could deny me coverage.

According to an article by Justin Papp, who writes about insurance for CQ Roll Call, I am one of only 7% of people over 50 who has a long-term care policy.

Lucky me? Not really. The policy I have isn’t nearly as comprehensive as the ones my parents signed up for in the early 1990s, and the cost goes up a couple hundred dollars every year.

Papp says among people who have long-term care coverage, “lapse rates” have remained low – and I think I know why. It’s a stressful sort of limbo that appears to benefit only the insurer: If I cancel the policy, they keep all the money I’ve paid over the years. And if I keep it, I might not be able to afford it as its cost continues to climb.

Either way, they’ll get thousands of dollars from me, and I’d have no coverage if I need it. So, I hang onto the policy, year after year, reading the fine print and fuming.

I’m sure it’s a tough business. Papp quotes a National Association of Insurance Commissioners’ estimate that about a dozen companies offered long-term care policies in 2019, compared to more than 100 in 2004.

But these corporations are supposed to be experts at the odds – I mean, insurance of any kind is really betting against yourself that something bad is going to happen to you, right? And the company is betting that it isn’t. How could they get it so wrong?

In my family’s case, my dad paid for many years for a long-term care policy he never used. My mom’s policy turned out to be very helpful in covering her memory-care costs, although we were on the phone with the insurer every month, debating some charge or other that the company tried to deny.

So, this time every year I wonder: Will I take after my dad, or my mom? I wish they were still around to give me advice.