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Why long-term care insurance can be so hard to get

When looking at the stats, it's clear that long-term care insurance can be incredibly hard to get for those with pre-existing conditions. In fact, it's been said that one out of every seven people who apply will be denied.

On one hand, it's hard to see why people are denied. While the insurance may be costly, shouldn't there be an option for everyone?

The problem -- for insurance companies, anyway -- is that many people with these conditions already know how much they plan to do and spend to fight their conditions, so only those who would benefit will try to get an insurance plan.

For example, if someone has a certain type of cancer, the average cost of treatment could be $8,000 each year. This would suggest that the insurance company could just sell the policy to everyone for $10,000 per year and still be safe, even when some people racked up higher costs.

However, though the average may be $8,000, experts have noted that the reality is that the average doesn't apply to those who buy coverage. Some people may decide not to use intensive treatment, meaning it will cost them under $8,000 per year. They won't buy a plan. The only ones who will are those who have decided they'll do all they can to fight the condition, knowing it'll cost more than the $10,000 they'll pay out. Therefore, nearly all of the people who actually purchase insurance will spend more than $10,000, even though it's over the average.

This is the reason why insurance companies will turn people down, rather than just offering expensive plans. Since it makes long-term care insurance hard to buy in New York if you have a condition already, you need to know all of your options up front and what legal steps to take to set yourself up for the future.

Source: Slate, "The Wisdom of the Ailing," Ray Fisman, accessed Feb. 02, 2016

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