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Money May 2018

Dollar Sense

In Search of Long-Term Care Insurance? Avoid the Scammers

By Teresa Ambord

Agents selling fraudulent LTC policies are well trained to express sympathy for would-be customers who haven’t been able to find coverage or can’t afford the coverage they do find. To an unwary senior, that’s endearing.

Long-term care (LTC) insurance is a great idea. It’s also getting harder to obtain as companies that sell it are becoming stricter about who they will insure and what treatments they will cover. If you’re already in poor health at the time of purchase, you may be turned down flat. Unfortunately, this means that seniors in search of LTC insurance are a ready target for fraud.

Agents selling fraudulent LTC policies are well trained to express sympathy for would-be customers who haven’t been able to find coverage or can’t afford the coverage they do find. To an unwary senior, that’s endearing. Scam artists may also go after customers who do have LTC policies to sell them supplemental or alternate plans, which seem to be more affordable. It’s not until these customers file claims and are denied payment that they realize they’ve been cheated. By that time, of course, it’s too late.

A bogus policy may take many forms, according to the Coalition Against Insurance Fraud, (CAIF). Sales representatives may:

  • Say the policy they are selling will cover all a consumer's needs.
  • Try to sell the senior a policy that is unaffordable.
  • Push overlapping policies that aren’t needed.
  • Attempt to make the consumer feel guilty about the possibility of becoming a burden to his or her family if there is no policy in place.
  • Sell policies that the representatives know are too expensive for the consumer.
  • Sell expensive overlapping policies when only one policy is needed.

 

Know How to Protect Yourself from These Scammers

What can you do if you're approached by someone offering a replacement policy? If a salesperson approaches you offering a replacement policy, the CAIF advises you get a second opinion. Scam artists may express a lot of sympathy for your situation, but they also tend to be pushy and impatient. They urge you to sign a contract quickly, without checking with anyone. In other words, they want to close the deal before you realize you’ve been scammed.

Unscrupulous salespeople may also seem inexperienced, unable to answer basic questions about the policy they are promoting. If you’ve already signed, check with your state insurance department. Some states require a “free-look” period of 30 days during which you can cancel a policy and get a full refund of premium. If you do cancel, notify the company by certified mail and keep copies of everything. You may need to prove the date you cancelled. \

Before you sign with any LTC insurer, or change your current policy, check with your state insurance department (naic.org) to find out if the company is licensed. Also check with A.M. Best (ambest.com) to find out if the company you’re choosing is financially strong and has a good reputation. Be aware that even healthy companies may have some overzealous salespeople who will try to sell products that aren’t right for you. Take your time and, at the very least, get a second opinion.

 

Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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