Buying long-term care insurance is supposed to be a good thing--it means you are prepared to meet your long-term care needs....Read more
What Happens If Your Long-Term Care Insurance Company Fails?
- February 5th, 2015
When you buy long-term care insurance years before you need it, you are taking a gamble that the company will still be around when it is time to pay out. But what happens if the company goes out of business?
Usually insurance companies don't just suddenly shut their doors. Instead, another insurance company buys out or absorbs a company that is having problems, and the new company honors the old company's policies.
Local Elder Law Attorneys in Ashburn, VA
Margaret A. O'Reilly, PC
Margaret A. O’Reilly is an estate planning and elder law attorney with over thirty-five years of legal experience. Attorney O’Reilly graduated from Duke University with a degree in psychology, and received her law degree from Northeastern University School of Law in Boston, Massachusetts. For over 15 y...
Hale Ball Carlson Baumgartner Murphy PLC
Jean Galloway Ball is certified in Elder Law by the National Elder Law Foundation. She is a 1977 honors graduate of the National Law Center, George Washington University, and she did her undergraduate work at the University of California at Berkeley, graduating Phi Beta Kappa in 1971. She is admitted to practice in Vir...
The Estate Planning & Elder Law Firm PC
Bill founded The Estate Planning & Elder Law Firm, P.C. in 1994. Bill limits his practice to the areas of estate planning and administration, incapacity planning, Medicaid, asset protection planning, and elder law. He is one of (15) fifteen attorneys practicing in Virginia, Maryland and the District of Columbia, ce...
If an insurance company does fail, every state has an insurance guaranty association that protects consumers. The purpose of the guaranty association is to take over the policies of an insurance company that is experiencing extreme financial difficulties and ensure that claims are paid. The guaranty association may provide insurance coverage directly to consumers. Alternatively, the association might facilitate the sale of the policies to another insurance company. It is also possible that policyholders will be given the opportunity to cash in their policies.
The downside of the state guaranty association is that it provides coverage only up to a certain limit. Each state caps the maximum amount its guaranty association will pay out, and the figure is typically between $100,000 and $500,000 per policy, with most states offering $300,000.
In a recent blog post, Phyllis Shelton, author of Protecting Your Family With Long-Term Care Insurance, called the failure of a long-term care insurer "an extremely rare situation."
If your policy is purchased by another company or taken over by a guaranty association, it is important to continue to pay your premiums. Failure to pay premiums could result in the termination of your policy.
For the Web site of the national guaranty association, click here.
For more information about long-term care insurance, click here.
Last Modified: 02/05/2015