Long-Term Care Insurance and How Underwriting is Important to the Application Process

Underwriting as it relates to insurance is evaluating the risk and exposures of potential clients. The underwriters decide how much coverage the client should receive, how much they should pay for it, or whether even to accept the risk and insure them. Essentially, underwriting is the acceptance of risk in return for payment. This is the reason that your good health buys your policy. Without reasonably good health, purchasing a long-term care policy is not possible.

The function of the underwriter is to acquire—or to "write"—business that will make the insurance company money, and to protect the company's book of business from risks that they feel will make a loss. In simple terms, it is the process of issuing the long-term care insurance policies.

Each insurance company has its own set of underwriting guidelines to help the underwriter determine whether or not the company should accept the risk. The information used to evaluate the risk of an applicant for insurance will depend on the type of coverage involved.

The following are the underwriting procedures used by the company.

The first step in underwriting after the application is received is where the applicant lists his or her relevant personal health history and authorizes the insurance company to examine their medical records.

Next, the carrier will schedule a phone health interview that lasts for about 15-20 minutes. This is to assure the carrier that the applicant does not have any cognitive problems.

The carrier will often request a copy of the medical records from the applicant’s primary care physician to verify the person’s overall health. The records from a specialist may also be requested as well.

The biggest delay in this underwriting process is in the request for medical records. Sometimes the doctor’s office does not process the record quickly. Once the carrier receives the medical records, a final underwriting decision usually follows very quickly.

A long-term care specialist can match you up with the carrier and a plan that best fits your health and budget.In conclusion, health determines the way underwriters look at each potential client. Having one particular ailment may not be an issue with one carrier but may be with another carrier. Additionally, if a client has more than one illness, the combination may cause them to either be uninsurable or have the premium increased or rated up.

When learning about long-term care insurance, it is important to consult with a long-term care specialist. Usually, a long-term care insurance specialist has additional education and training (LTCP, CLTC) in long-term care financing and planning. An independent specialist can match the carrier to your own particular needs and budget without being bias toward anyone company.
For a great online source for articles and resources on long-term care financing and planning, visit LongTermCareInsurancePros