The Most Common Mistake: Group long-term care insurance often costs more and offers less

Conventional wisdom says that group insurance policies cost less than a policy you purchase on your own. That may be true for certain types of insurance, but it is not always true for long-term care insurance.

You can probably get better benefits for less premium if you purchase your own long-term care policy rather than enrolling in a group long-term care policy.

A few years ago, I helped a couple purchase a long-term care policy.  A few months after purchasing it, they gave me a call and said that they weren’t going to keep the policy because their employer was now offering a group long-term care policy.  They assumed that the group long-term care policy was going to be better than the policy they’d purchased on their own.

I encouraged them to take a close look at the group policy and to carefully compare the features of the group policy with the features in the policy they had purchased on their own.

Here’s what they found out:

  • The group policy had 25% LESS benefits for care received at home.
  • The group policy had a Maximum Lifetime Benefit of $273,500.  The policy they bought on their own had an unlimited Maximum Lifetime Benefit (it could never run out of benefits, regardless of how long they might need care.)
  • The group policy had a 90-day deductible (a.k.a. “Elimination Period“) for care at home.  The policy they bought on their own had a zero-day deductible for care at home.
  • Even though the group policy had less benefits, it cost 15% MORE premium than the policy they purchased on their own.

What was even more surprising to them was that the group long-term care policy policy was offered by the exact same insurance company from whom they had purchased their individual policy.

The same insurance company gave better benefits and charged less premium for individually-purchased long-term care policies, rather than group long-term care policies.

About Scott A. Olson

Scott A. Olson, is the author of “The Guidebook for Making Long-Term Care Insurance Easier.” He is a licensed insurance agent and has specialized in long-term care insurance since 1995. He is licensed to sell long-term care insurance in over 40 states. Scott was born and raised in New Jersey and attended Rutgers University. Scott was a caregiver for a close relative for two years. That personal experience has made him acutely aware of how to help his clients design and choose a long-term care policy that will benefit them when they need it the most. Scott and his wife Carolyn live in Redlands, California. Scott and Carolyn have four sons.