LTC News - Hall of Shame, Continued

UPDATE 3/13/2021: When this article was first published, I reached out personally, directly to the writer via e-mail as well as to the general "corrections"/editorial staff with my detailed concerns. No one from Business Insider has responded to me, nor have they made any corrections. #NotJournalism

Here is a link to the Business Insider article being examined in this latest edition of the occaisonal LTC News "Hall of Shame": https://www.businessinsider.com/personal-finance/hybrid-long-term-care-insurance-vs-long-term-care-insurance

There is SO MUCH wrong here it is hard to begin.

"Cognitive Impairment" is not even mentioned as a benefit trigger - that's 60% of all LTCI claims.

Then the ADLs!

Neither "Ambulating" nor "Personal Hygiene/Grooming" are ADLs used in any type of LTC insurance - traditional or hybrid. Those should have been shown as: "Transferring" and "Bathing" which are very different if understood properly.

Gross Misrepresentation Regarding Home Care Benefits

I do not know who that Prudential CFP "life insurance specialist" is but she can't spell L-T-C (or the reporter misunderstood her) since she says, and the story states TWICE, that "traditional long term care insurance can only be used for nursing home care" unless you buy a rider. WHAT?! That practice ended 15 if not 20 years ago, even longer for most of the reputable companies.

And the statement that traditional LTCI requires a "licensed professional" is misleading as well. It may require a professional agency that is licensed for CUSTODIAL care IF a state requires that, but the caregiver in the home does NOT have to be licensed.

The "Use It or Lose It" Canard

And, OF COURSE, the ubiquitous "use it or lose it" hit on traditional LTCI with NO contextual information comparing premiums. Yet again, the reporter - and her sources - fail to note that to buy equal LTC benefits you have to pay DOUBLE the premium for a life insurance hybrid!

Yeah, great, a hybrid gives you a death benefit if you do not need care - but you pay twice as much premium for the privilege! That is not a benefit; it is a cost. With traditional LTC insurance you get to keep all that extra premium in your own pocket, and if saved over time might well equal the same death benefit. (CLICK HERE for a deep dive comparative analysis.)

The article also fails to properly mention that if you DO need care (the point of buying LTCI) that your hybrid cash value and DB are paid back first resulting in a very expensive "use it AND lose it" LTC policy.

Cash Benefits ARE Great, but...

I will concede that "cash benefits" available exclusively on some hybrid plans are the best way to receive your LTC benefit payments, but it comes with a huge price tag compared to traditional LTC insurance. And many hybrids are reimbursement policies just like traditional LTC insurance requiring receipts - yet another context-critical fact which is not noted in the article.

The example used to describe how a hybrid works makes no sense, and it seems to describe a very limited type of hybrid plan - of which there are many different variations:

"For example, let's say you have a $400,000 hybrid long-term care insurance policy with $100,000 in coverage for long-term care and a $300,000 death benefit. In this case, you will receive a check for 2% of your $100,000 tax-free every month for 50 months, no receipts necessary."

Always Check Your Sources

Perhaps the reporter, the BusinessInsider "Associate Editor for Insurance," who is also "a licensed attorney who practiced litigation and insurance defense," was misled by a primary source (the Prudential "life insurance specialist"?) who works for a company that, A) no longer sells traditional LTC insurance, and B) only sells a hybrid life policy with a LTC accelerated death benefit rider ... but maybe I am being too cynical ...

Check your facts. Check your sources. Do not believe everything you read "in the paper" or online no matter how credible the publication. Only buy LTC insurance from a true independent specialist who independently represents ALL types of LTC coverage, traditional and all of the many types of "hybrids."

?2021 William E. Comfort