Annual Reviews Are Critical to the Health of Your Long Term Care Insurance Plan

If you own long-term care insurance, be sure to review your policy every year. An annual review provides an opportunity for you to re-examine your coverage, analyze relevant federal legislation that may impact the tax treatment of your long-term care insurance premiums, and assess any changes in your personal financial situation.

Get Reacquainted with Your Policy

Once a year, it's important to review your existing contract benefits, what triggers must be satisfied to receive benefits, and what the procedures are for filing a claim. If you've chosen an inflation protection option, you may want to evaluate your current benefits and see how much they've grown in light of rising health care costs.

Your policy may also carry a provision to upgrade (step-up) your contract without underwriting. If your policy has such a clause and your carrier offers an enhanced policy, you may want to examine if a step-up is right for you.

If yours is a tax-qualified policy, it is important to keep pace with federal legislation that has passed or is pending. However, be sure to consult your tax advisor about how changes might affect you.

View Your Contract in the Context of Your Current Situation

This annual review also gives you a chance to examine your current financial situation and determine what impact recent life circumstances and investment results might have on your existing long-term care insurance plan. For example, large investment gains or inheritances sometimes increase your ability to self-insure and reduce
your need for protection. If there has been a divorce in your family, or your investment portfolio has lost ground, the opposite may be true.

Staying current also means knowing how your long-term care coverage fits into your entire estate plan. You'll want to review the policy in the context of your overall wealth transfer strategy. Your discussion may motivate you to create an appropriate estate plan, if you don't have one, or to review your existing plan.

Stay Involved

Revisiting your policy each year is important to help ensure your coverage continues to meet your needs. While the review may only require one or two hours of your time each year, the resulting benefits can be substantial and long-lasting.