If you ask the carrier how well it pays claims, you'll get the same response: "We pay 90% or more of our claims in a timely manner." There is really no way of knowing which company is most reliable with claims except by reputation. My observation after 18 years in the insurance business is that companies with a long-standing image or reputation to maintain are best with claims. Some of these companies or their parent companies have been in business over 100 years. They didn't survive that long by not paying claims. I have observed that some of the smaller, more aggressive companies don't care that much about image and are more likely to dispute claims.
One way to avoid the claims hassle is to choose a carrier that offers "indemnity" or "cash" benefits. Let me explain. There are two ways to pay benefits under a long-term care policy--Claims-based, sometimes called expense-based, and indemnity-based. Claims-based or expense-based means that every expense must be submitted for reimbursement. Since a number of LTC related expenses (see understanding benefits section) are excluded under all policies, some claims may be denied. Also, the expense reimbursement method only pays up to expenses actually incurred-It may not pay the maximum allowable policy benefit. Under the indemnity-based method, once you qualify for benefits, you don't submit claims. The insurance company will send you or your representative a check once a month for the maximum allowable daily, weekly or monthly benefit in the policy. Some companies with built in cash or indemnity pay a lesser amount under that option than under a claims option. You can use the money to pay your costs and if any is left over, pay for items not covered under the policy, such as personal need items, diapers, medications, doctor visits, transportation, etc. Or you can stick the extra in the bank to pay future costs if the policy runs out.
With indemnity, you are more likely to receive the full benefit in the policy before you recover or die. Under both plans, you are, however, only reimbursed for the actual number of days you receive care. Both plans also require periodic proof that you're still eligible for benefits. Not all carriers offer indemnity. For those that do, it might be part of the policy provision or it might be a separate rider.
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