Bob Brown was recently involved in a minor auto accident. His car was hit from behind, and he, in turn, slammed into the car in front of him. He would like someone to explain his coverage and show him where, in his auto policy, each of his losses might be covered. The explanantion of coverage and the location of coverage should be in general terms for most auto insurance policies, please do not use only your personal auto insurance policy as your guide for your response.

Help him out by doing that for each of the following items.

The cost of a medical checkup for his passenger, Ruth
The front and rear damage to his car
The damage to the car in front of him
The damage to the car behind him
The total amount of liability protection for bodily harm and property damage

Long term care insurance, which aids you in caring for yourself during your old age, could be the most important decision you will make for the rest of your life.

Because of the complications in buying long term care insurance you need to be wary of the 7 most deadly traps that could rob you of your independence.

Trap #1: Not checking out the background of your insurance agent

This is not car insurance or a homeowner policy that can be switched from company to company. You will be making a long investment in your future and you don’t want to waste money and time.

Just because you have an agent you like who handles your car insurance doesn’t mean he will be able to guide you through this complicated maze of potential policies. Getting the right agent who knows what he is doing and is honest is absolutely vital.

Only deal with those agents who have clean records. The best way to research them is with your state insurance regulator. You can also check with the American Association for Long-Term Care Insurance (aaltci.org)

Trap #2: Not researching the insurance company thoroughly

You want to make certain the insurance company has a low complaint ratio, and does not have a history of increasing the premiums on “classes” or “groups” of policyholders instead of individuals.

Verify the financial strength of the long term insurer. That’s important since you will be keeping this policy for many years. You don’t want to be faced with fickle finances later as your insurance company scrambles to raise premiums in order to stay in business.

Trap #3: Not Buying a Tax Qualified Policy

This is very important because you do not want your benefits considered to be income.

You also want to make sure you can deduct some or all of your benefits from your taxes. This is an important detail that can save you a lot of grief later.

Trap #4: Not knowing exactly what your coverage includes

Will your policy care for all of your needs, or just some of them? Do you know which ones, or are they hidden in the fine print?

For example, is it a nursing home only policy or will it cover your in-home care expenses such as daily living aids? Will you be able to stay in your own home because your policy pays people to help you with your meals, bathing, or other needs?

Trap #5: Not getting a policy that is inflation-proof

This may be your most important consideration since inflation grows expenses. Inflation is something we can count on, so we need to be adequately prepared for it, especially as we look down a road that could stretch for 20 years or more.

It is important to know if your policy gives you the right to add coverage at a later date, or if your coverage increases automatically.

Trap #6: Not being able to back out of a policy

Will you be able to conceal your policy within 30 days of purchase?

You should be able to back out it you change your mind or discover the policy is not in your best interest. Not only should your policy give you a way out if you are displeased, but you also want to receive a refund.

Trap #7: Not being able to keep a policy indefinitely

Can you keep your policy as long as you pay the premiums, or will the company be able to drop you?

Does your policy also include a non-forfeiture benefit which will continue to pay for your care even if you stop paying the premiums? That feature in not totally necessary and can increase your premiums costs, but it is still important to keep in mind.