First, an apology. This article puts the spotlight on improper claim practices, and by doing that, we commit the unfair act of not giving equal time to companies that do it right. Long-term care insurance provides a valuable safety net for a lot of people, and a good many insurers look for ways to pay claims, rather than looking for ways not to pay. Even companies that don’t always follow the rules are made up of mostly honest people who, in our view, want to do the right thing.
That said, the side we present is a story not often revealed and even less often understood. Improper claim practices impose a surreptitious tax on policyholders. But it isn’t just the consumer that pays. Companies that underpay claims can also price their insurance lower than those that don’t. Since the sale of insurance is largely price driven, companies that use these tactics gain an unfair competitive advantage over other companies that play by the rules. Eventually, other companies either have to adopt the same practices or else lose market share.