Insurance companies are not at the top of the list of the most-loved industries. Why? you may ask. Here are the five reasons people hate their insurance companies — plus a pinch of real-life information that may help them feel differently. You can also watch my video about this:

Reason No. 1: It is mandatory to carry an insurance policy in many instances

If you own a home or own or lease a car, chances are you are told as part of your arrangement with your bank or financial institution that you are required to purchase an insurance policy to protect the asset. Nobody likes to be forced to do anything. Seriously, can you think of a single thing that you are glad you are forced to do? Like being forced to pay taxes? How about filling out forms, pretty much of any kind, ever? Or sitting on hold for hours to cancel a subscription you no longer want? The list goes on and on. It’s fine if we have the autonomy to decide on doing things, but being forced to do it, let alone if it is to spend money, yeah, no, thanks.

Keep one thing in mind: If it wasn’t for the insurance company, you would have only two options when it comes to buying that house or car. Option one would be to pay for it in full, upfront. Without a loan, you would not have to worry about being forced to purchase insurance to protect it. Although I can’t fathom why you wouldn’t want protection on something that is a pure asset. However, I digress. Option two would be not to make the purchase at all. Not great options. Maybe that insurance requirement isn’t so bad after all, if it is actually giving you more choices.

Reason No. 2: You pay money and don't get anything tangible in return

Go to the market and buy some groceries. You spend money and leave with — wait for it — food. When it comes to your insurance policy, you pay money and get … well, some paperwork with lots of words on it. More accurately, today you don’t even get that — you get a PDF file. If feels like you’re not getting anything since it isn’t something you can pick up, hold, use, consume, trade or sell. What are you really paying for?

My father used to have a saying. Yes, I’m going there. He used to say that the true cost of your insurance isn’t shown in your policy. In fact, the true value of your insurance isn’t known until you have a need for service or have a claim. That’s a famous quote from Marty Susman, my dad and mentor. And he was right! You may not see what or where your buckies are going when you pay your insurance premium, but you can bet your tushy that when a loss happens, you will be glad you have the full force and finances of a good insurance company to step in and help you.

Reason No. 3: You've heard some really bad stories about insurance companies

Nothing like a good ghost story to tell when you’re camping, and along the same lines, who hasn’t heard or shared a tale of an insurer who did them wrong? Pretty much everyone. I get it, things don’t always go as you expected, and it makes for great fodder to commiserate about who had a worse experience with the big bad insurance company. Misery loves company, right? Big fun!

Insurance companies and their representatives are people. I know some of us forget that, but it’s true. Some are terrific at their jobs, some are decent, and some truly aren’t great. No question about it. And let’s be honest, who is walking around dying to share a story about a great situation they had with their insurance company? Like, practically none. So remember that for each bad story you hear about an insurance interaction, there are literally millions of interactions that went well — they’re just not super fun to yap about.

Reason No. 4: You had a claim denied

Hey, you’re paying money for as long as you can remember, and when that time comes and a claim occurs, for some reason or another you don’t get all of the coverage or money you feel entitled to. This is one of the most common reasons that the industry gets a bad rap. No further explanation necessary — paid premium plus denied claim equals bad mojo.

Insurance policies are contracts. Legally binding contracts. We agree to pay the premium, and in return, the contract says under what circumstances the insurance company will pay if a loss occurs. Do you think it is possible that there are things that are not covered in the insurance policy contract? Unless you have a policy that says it will cover everything under all circumstances, then the answer is yes. There are bound to be times when a claim is not covered because the contract does not provide coverage for it. Read your policy, and you can avoid being surprised by a claim denial.

Reason No. 5: The concept of insurance is confusing

You’re going to pay $1,000 today, and if a loss occurs tomorrow, the insurer may pay out $1 million? How is that even possible? How can that happen? Similarly, how can you pay $1,000 every year for 20 years and then have the insurance company decline to pay you for a claim? Spoiler alert: See Reason No. 4 above.

The insurance industry is complex. If you understood it as well as I do, then you’d be an insurance expert. Most folks, obviously, are not insurance experts. Don’t feel bad if you don’t understand how your insurance policy or insurance company works, since it would be a great anomaly if you did. Instead, find an expert to work with you. There is no shortage of licensed insurance professionals in this country. Think I’m kidding? We’re looking at well over 1.2 million licensed insurance professionals — certainly enough for you to find one you like.

I bet if you do find one, you will not be as likely to be frustrated about insurance or your insurance policies.

Want to learn more about insurance? Visit KarlSusman.com.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

When it comes to choosing an insurance agent or broker, consider the same process you’d use when finding a competent and reliable medical provider.

Imagine the following scenario. During your annual physical, your doctor says that you need to have surgery. It’s a pretty big procedure, but he or she says you should get it done sooner rather than later. What do you do? Likely, you’ll start trying to find a good surgeon, asking your doctor for recommendations, checking with friends and family to know if they have had a positive experience with one, checking with your insurance company to see if they have any recommended surgeons. You may go online and check Yelp or Google to see reviews about doctors as well.

Once you find a few potential surgeons, what do you do next? Schedule your surgery? Probably not. You’ll want to meet them first. Talk with them. Let them see your health history. Find out how many surgeries of this type they have done in the past, what their success rate has been. When seeing the doctor, you will likely also be assessing their personality and bedside manner. The staff in the office play a large role in your overall level of comfort with them, too. If all goes well, you still won’t schedule your surgery on the spot. Chances are, you will still poke around more online, ask around, verify information you’ve found so far. Then, and only then, after going through all these machinations surrounding which doctor is just right for you, will you decide on one, pull the trigger and schedule your surgery.

All of this is entirely reasonable. This is surgery after all — it’s your body, your life. In a similar vein, when selecting an insurance agent or broker, the individual that you may entrust with assisting you in protecting your assets, from your home, your car, health insurance, even life insurance (and we’re right back to your body), it may not occur to you that not all agents and brokers are created equal.

Insurance agents are not all the same

Before you shrug this off, I will agree that you are worth more than any house, any car, any business. Having said that, having the appropriate insurance protection at a price point you can live with can be a matter of financial life-or-death. Ending up with the wrong agent can cost you, not only in potentially paying more in premium than is necessary, but also in not having the appropriate coverage if you have a claim. Nothing chaps my hide more than when a new prospect comes to me and tells me about a claim they were denied coverage for and why, and the why is their agent simply didn’t give them what they asked for.

Not all insurance agents and brokers are created equal. I remember long ago when I was a mere little guy in college, thinking I was going to be a pediatrician, because, well, doctor or lawyer, right? I had to dissect a fetal pig for one of my courses. Things did not go well, comically so, and I was ready to throw in the towel. My father told me to remember, and I quote, “Don’t worry about grades. The doctor who graduates from medical school with a C average still has MD after their name.” A strange comfort, and I never forgot what the ramifications of this were in every industry.

To sell insurance policies, each state has guidelines for the licensing process that an individual must go through. Imagine hours and hours of instruction and tests — yes, plural tests — that are state-dependent, but in no state is it a simple task. But guess what? The exam is pass-fail. And even if you pass the first time, you have, as my father indicated, the same insurance license as the person who failed the exam repeatedly before managing to pass.

You may also know of the incredible phenomenon with pass-fail exams. If you fail, you could have “just missed it by one question.” However, if you pass, then you might have “only missed one or two questions,” because, yes, exactly. I tell you this so that you understand that licensed insurance experts really are not all the same.

Tips for choosing an insurance agent or broker

Here are some important tips to keep in mind the next time you are seeking out someone to be your insurance agent or broker:

1. Check the status of their insurance license online. All state departments of insurance have a website where you can put in a name and get a history of the licensee. See if they have any reprimands on file, any noncompliance notices, fines or restrictions on their license.

2. Find out how long the agent or broker has been licensed and in the industry. Don’t knock the newbies, but all things remaining the same, they may not have the experience you require.

3. Look for any insurance designations other than the basic insurance license. While only the license may be required to begin offering insurance policies, there are designations out there for an individual who wants to put in the time to go that extra mile. Each of them will show you that this person wanted to do more than the minimum. They wanted to learn more and do more, and that hopefully means they will perform better for you.

4. See which insurance companies the agent or broker is approved to do business with. If you don’t recognize a single insurance company that they represent, that’s a red flag. Better insurers tend to kick less-savory agents to the curb rather than allow their brand to be tarnished by schlocky representation.

5. Ask the agent or broker how long their average client has been with them. If they are unwilling to tell you, or they give you a vague answer, then you should worry. Good agents and brokers will be proud to tell you that what we call in the business their “retention numbers” are high, meaning clients that come to them stay with them.

Far be it from me to knock my brethren insurance agents and brokers. I make it a point to try very hard never to knock the work of another professional. Yes, I try. But when it comes to protecting the things that belong to you, it may not appear so important now how or through whom you purchase your insurance policy, but I guarantee that if a claim comes down the way, you will be glad you took the time to select someone who cares enough about what they do for a living to do more than the bare minimum when it comes to educating and continuing to educate themselves on the insurance marketplace.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

State Farm plans to stop renewing home and apartment insurance policies in California beginning July 3.

The move, which will affect a total of 72,000 policyholders, will be done on a rolling basis and affect homeowners, rental dwelling, residential community association and business owners policies, the insurer said in a March 20 statement. On August 20, the withdrawal will start for commercial apartment policies.

Those affected by the decision will be notified before their policies expire and will be given information on other coverage options, the company said. It added that independent agents in California will continue to service policies not affected by the changes.

State Farm, which stopped offering new homeowner policies in the state last May, cited issues related to inflation, natural disasters, reinsurance rates and “the limitation of working within decades-old insurance regulations.”

Renters insurance will not be affected, the insurer said, adding that the “difficult but necessary” decision will affect a portion of State Farm's California policyholders as follows:

• Non-renew about 30,000 homeowners, rental dwelling and other property insurance policies (residential community association and business owners). (A rental dwelling policy insures rental home owners.)
• Withdraw from offering commercial apartment policies with the non-renewal of all of those approximately 42,000 policies. (A commercial apartment policy insures apartment owners.)

“We will evaluate the need for any additional business actions as market conditions change,” State Farm said. Combined, the policies represent just over 2% of State Farm General’s policy count in the state.

The move follows those of other insurance companies leaving California, including four Kemper subsidiaries as well as Farmers Direct Property and Casualty Insurance — both of which said last November that they would withdraw from certain homeowner policy markets.

Like Florida, California has seen a number of insurers leave the market, often citing the region's growing climate-related risks and reinsurance rates. Last month, two home insurers said they were eyeing rate hikes in Florida.

In October 2023, a S&P Global Market Intelligence study found a national average spike of about 8.8% in homeowner premiums last year.

In response to the state's uptick in non-renewal notices, the California Department of Insurance recently released 10 tips for finding residential insurance. This includes a help page with links for filing consumer complaints.

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“Filing your insurance claim after a wildfire is emotionally draining and should be done sooner rather than later to ensure your place in line is held,” says Los Angeles-based Karl Susman, an insurance broker for over 30 years, an expert witness in lawsuits involving coverage and agent malpractice issues and a regular contributor to Kiplinger.com.

He worries that a great deal of false and misleading advice on how to deal with claims resulting from the California wildfires could result in substantial delays in claims being paid out. Here, he answers some common questions that policyholders ask once they’ve suffered a loss and addresses how to deal with some scenarios.

Common questions from policyholders and a few scenarios

Q: I have to file a claim. Do I need a lawyer right away?

Start with the assumption that your insurance company is going to do right by you. Do not rush out and retain a lawyer. If it turns out that they don’t do right by you, then ask for a claims manager or supervisor. If that is still not satisfactory and you feel the insurer is not being reasonable, then it is possible to retain a public adjuster (more on that later). If that still is not satisfactory, then and only then would you want to hire an attorney.

“Hiring an attorney prematurely or unnecessarily for the typical loss slows down the process of resolving your claim and can add considerable expense, as lawyers will typically be paid a percentage of the settlement,” Susman notes.

Also, for the typical storm-related loss, hiring an attorney takes your claim to a completely different insurance company department. There are fewer adjusters who are trained to deal with attorneys. This will cause a delay — sometimes lasting months and even years — with no benefit to the policyholder.

Q: I’m frustrated with my insurer’s response to my claim. Would it help me to file a complaint against them about the valuation of my claim with the office of my state’s insurance commissioner?

“Generally, it is a zero-sum game,” Susman says. The insurance commissioner’s office will send a letter to the insurance company that essentially says, “Please justify your actions with this customer’s complaint.” The insurance company will answer the complaint with the same documents they gave to their customer. “Filing a complaint seldom accomplishes anything, but again, we are talking about the average claim. The exceptional, bad-faith case is a different story,” Susman points out.

Q: Is it worth it to hire a public adjuster? I hear they have a bad rap.

The typical cartoon-character public adjuster shows up at your business or home after it has been destroyed, quickly signs you up and takes a piece of the insurance settlement, leaving you with much less than your own insurance company would have offered you.

“Propaganda,” says Susman. “Just as all lawyers aren’t crooks, there are good and some very poor public adjusters. In my experience, the main reason people are often dissatisfied with having retained a public adjuster is that the expectations of what a PA can do are not often met, and the settlement process can be slowed down considerably. I have seen instances where it took years to resolve a claim, and the insured got nothing different than what the company first offered.”

Insurance companies are not trying to avoid paying claims. “The public often thinks that hiring a public adjuster will in some way force the insurance company to do more,” Susman says. “But that is not how insurance functions. If you can justify the claim, the insurance company will almost always pay it. But they need to justify the payment.”

He recommends, “If you are having trouble getting a claim resolved, put on your claims adjuster hat and ask yourself, ‘If I was the adjuster, what would I need to see in order to pay this additional money?’”

Q: My home business was totally destroyed. I have insurance, so what should I do?

“If you have a total loss like that, I would ask for policy limits,” Susman says. “What often happens is that when people have a total loss, and they realize they didn’t have enough coverage, instead of taking policy limits, they want to fight and get more. It is a zero-sum game, the worst thing to do. The message is simple: If you have a total loss, don’t try to collect more than your policy limits. It is a waste of time and money and will reward you with heartache.”

Some final, important recommendations

• Please, don’t forget that claims adjusters are people. They have good days and bad days just like everyone else. Their job is to hear from folks who are at their worst because something bad has happened. Try to have a little sympathy, a little empathy. Be polite.
• Don’t exaggerate or lie. This can nuke your entire claim.
• Don’t forget that your adjuster gets paid to settle your claim. They want to settle your claim, not reject it. Help them help you.
• Think of technology as your friend when claims people are pulling out their hair with so much to do. Providing good photos and videos to your adjuster will help speed the process.
• Review your insurance needs annually with your agent or broker.

Dennis Beaver practices law in Bakersfield, Calif., and welcomes comments and questions from readers, which may be faxed to (661) 323-7993, or e-mailed to Lagombeaver1@gmail.com. And be sure to visit dennisbeaver.com.

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This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

A growing number of Americans are approaching the age at which they must consider how to pay for long-term care. For many, a hybrid insurance policy, which combines life and long-term care insurance, continues to be an attractive option. These policies help protect a retirement nest egg from being depleted by expenses incurred when retirees can no longer care for themselves. And, if the insurance is not needed, there is a death benefit that can be passed on to their heirs.

Here’s a great example of how it can work:

I recently met with a couple in their late 50s who planned to retire soon. Both have enjoyed successful careers and saved enough to accumulate a retirement nest egg that should support them for the next 40 years.

They didn’t have long-term care insurance, but earmarked about $200,000 from their savings to cover any possible long-term care needs. However, after viewing the benefits of a hybrid life/long-term care insurance policy, they changed their minds.

In this case, a hybrid policy will cover long-term care needs for both spouses and cost them $164,400 in premiums, with payment being made upfront in a lump sum. In exchange, they will receive long-term care insurance for payments of up to $5,000 each month per person. This policy has an unlimited benefit period, so as long as they qualify to receive benefits they will receive them — which is something that is not even available anymore in traditional long-term care policies — and that benefit will grow by 4% per year for as long as they live.

And here’s the kicker: If neither person ever needs long-term care, their heirs will receive a tax-free life insurance benefit of $125,000, effectively “reimbursing” 76% of the premiums paid for the coverage. In essence, this policy shifts the risk and financial burden to an insurance company at little cost to the couple.

I have often heard clients express concern about potentially spending a significant amount of money over many years for a traditional long-term care insurance policy and risk never needing the coverage, though the statistics would indicate they probably will. A hybrid long-term care policy helps address this issue. If long-term care is never needed, the policy’s life insurance death benefit is often similar to the amount paid for the policy. On the other hand, if long-term care is needed, the amount of money available can exceed the death benefit, often several times over.

Why It Makes Sense

Long-term care insurance covers the costs of care for people with a chronic illness or disability who cannot care for themselves for an extended period of time. Examples include dementia or Alzheimer’s disease, arthritis, cancer, nervous system diseases and diabetes.

If a person cannot perform activities of daily living on their own — bathing, dressing, grooming, eating, etc. — the insurance will help cover the costs of hiring help.

And while healthy people today often can’t envision needing such care, seven out of 10 people turning 65 will need long-term care at some point, according to the Centers for Medicare and Medicaid Services.

Without any long-term care insurance, the cost of care is not inexpensive and continues to rise. For example, insurer Genworth Financial’s 2020 Cost of Care Survey estimates the median national cost of a home health aide at nearly $55,000 annually and a semi-private room in a nursing home at $93,000.

Features and Benefits

For financially well-off individuals who might otherwise consider self-insuring for long-term care, here are some of the attractive benefits offered by a hybrid long-term care policy:

No Increase in Insurance Premiums: The cost of a policy can be locked in from the initial purchase date and not subject to an increase. Unfortunately, this has not been the case with traditional long-term care policies, causing financial strain for some people as premiums can increase significantly over the life of the policy.

Substantial Return of Premium: The death benefit protects people who end up not needing long-term care. While data indicate there is a high likelihood long-term care will be needed, a policy owner should know that the money spent for long-term care insurance will not be wasted. In most cases, a policy’s death benefit will pay back most of the premium dollars spent.

Leverage: A person could set aside $150,000 in an investment account earmarked for future long-term care needs, or instead use that $150,000 to purchase a hybrid long-term care policy. If they spend $150,000 to purchase a hybrid policy, at the very least it will return most of these funds at death. But because the potential long-term care benefits paid out could significantly exceed $150,000, there is tremendous leverage available in placing that sum of money in the policy.

Purchase with “Inefficient” Funds: Some hybrid long-term care plans offer the ability to purchase a policy in one lump sum — a feature no longer available with traditional plans. This presents an attractive opportunity for people who may have permanent life insurance policies that are no longer a good fit in their financial plans.

These legacy policies often have large cash values and subsequently large gains (the difference between the cash value and premiums paid) that would be subject to income taxes if the policy were to be surrendered or canceled. By taking advantage of what is referred to as a 1035 exchange (named after section 1035 of the Internal Revenue Code), one can “roll over,” on a tax-free basis, the cash value of the old life insurance policy to the new hybrid policy.

This feature offers the ability to repurpose funds into a product that has significant potential value in the future. Moreover, this can be done in one lump sum, so the purchaser never has to worry about paying premiums again. In addition, taxes can be avoided on any gains from the surrender of the life insurance policy, potentially saving tens of thousands of dollars in tax.

As with any insurance, there are considerations to be mindful of. Most importantly, the insurance company must have the long-term financial strength to remain in business for decades into the future and pay claims. Additionally, some people may not like the idea of giving up control of funds that were earmarked for long-term care by instead purchasing an insurance policy.

In the end, hybrid life/long-term care policies are providing people with valuable coverage, whether they need to use them for long-term care benefits or not. If you are in your 50s or 60s, you should begin planning how best to pay for long-term care. Each person’s health, finances and objectives differ, so consider all options, including whether a hybrid policy makes sense.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

Everywhere you turn this time of year you will see a Top 10 list. Whether it’s automobiles, restaurants, vacation spots, chocolates or gardening tools, you will find someone willing to guide you.

I don’t think Top 10 lists always work for you, particularly when it comes to retirement security.

Let’s use restaurants as an example of why lists often fail. Unless you have your own jet, a list of Top 10 restaurants in the country won’t help you decide on a site for your anniversary dinner next month. A more helpful list would describe restaurants within, say, 30 miles of your home.

Or perhaps you prefer Italian. Therefore, information on French, Indian or Vietnamese restaurants is not of much interest to you. Now you’ve narrowed it down to Italian restaurants within 30 miles of your home. But you prefer northern Italian cuisine.

Bottom line, before you start your search for the restaurant, decide what you want in terms of location, cuisine (even region) and, of course, your budget.

For the same reasons, that’s why I don’t do a Top 10 list for income annuity companies.

Income Annuity Companies Top 10 – No Way

Starting with price or income per $1,000 of premium, there are no consistent leaders in the industry. Insurance companies change their pricing as often as weekly and they often have different views of the interest rates they can earn on your premium.

Also, not all income annuity companies offer all forms of these annuities. While most companies offer single-premium immediate annuities, fewer offer deferred income annuities (DIAs) or a special version of DIA for rollover IRAs called a QLAC (which stands for qualified longevity annuity contract). And importantly, not all of these companies are rated A or better, which is my cutoff for credit quality.

So, getting back to the restaurant metaphor, with the kind of Top 10 list that doesn’t reflect your personal preferences, you might find yourself in a low-cost restaurant, miles from home, offering only the exact cuisine you’re allergic to.

Here are three pieces of advice to get you to the best income annuity choice for you.

Customize Your Income Annuity

While you’ve probably tried lots of different cuisines over the years, you may consider an income annuity only a handful of times in your life, such as:

• When you or your spouse retires and need a reliable income stream.
• When you reach 70½ and required minimum distributions (RMDs) begin. Since they are taxed as ordinary income, you’ll want to maximize your income to ensure you have enough to live on.
• When you receive life insurance proceeds.

Of course, the right time to prepare is not around a life event but when you’re calmly creating a retirement income plan.

Whatever the time, you want to customize your search to match your specific and individual needs. To accomplish that, play “what if” games concerning your options.

For example, what if you need income earlier and are willing to pay a higher premium to make that happen? Or does the income continue to your spouse? Or what if you want income to continue to your beneficiaries after your death? What savings source do you use to pay the premium?

Those are some of the questions you need to answer that will determine how much money you spend up-front on an annuity, what your annual payout is, and when payments will begin. Once you have designed an income annuity that best fits your needs, you can shop among insurance companies with the best rate for your choice.

Do It Yourself

You may ask, “How can I do my ‘what if’ research if I’m not talking to the company, an agent for the company, or a broker who represents many companies?”

Our suggestion is to do the work on your own to the extent possible. Agents or brokers, because of human nature, have their favorites, whether it be products, features or insurance companies. You need to avoid those biases wherever possible.

Look for tools that let you research on your own, preferably on an anonymous basis. This enables you to avoid entering any information that would identify you during the “what if” step — not even your name — so you won’t feel pressure from a salesperson as you answer questions about what age you want the income to start and the like.

Select Your Income Annuity Company

The process is not as daunting at it may seem, because there are tools that find the insurance companies that offer the best rates for what you want.

If you are happy with the plan you have designed for yourself, you may then ask for a comparative quote from multiple insurance companies (which will require name, date of birth and similar information). Look for an income annuity shopping service that offers a full lineup of the highest-rated income annuity companies.

These tools usually provide a service to help you apply for the income annuity either through a dedicated sales staff or through a referral to an independent agent. Make sure they fully understand your choices and you feel comfortable they’re handling the paperwork between you and the selected annuity company.

While you’re doing the work, the time you spend now will bring peace of mind later, when you aren’t worried about outliving your savings, no matter how long you live.

This article was written by and presents the views of our contributing adviser, not the Kiplinger editorial staff. You can check adviser records with the SEC or with FINRA.

When it comes to long-term-care planning, some consumers are starting to think short term. People who can't qualify for -- or can't afford -- long-term-care insurance are increasingly turning to short-term-care policies, which offer benefits for up to one year.

Short-term-care policies have lower premiums and looser underwriting standards than long-term-care policies, making them more accessible to people with health problems. But patients who end up needing extended care will find that these policies are sorely lacking. And short-term-care policies may not cover all the levels of care that a long-term policy would cover. Some short-term policies only cover home care, while others will only pay for care in a facility.

Short-term-care policies, offered by carriers such as MedAmerica, Kemper and Equitable Life & Casualty, have been around for years but are gaining renewed attention as long-term-care insurance premiums have climbed sharply in recent years. And wealthier consumers who apply for long-term-care coverage are often declined for age or health reasons.

Short-term-care insurance is "your plan B option," says Jesse Slome, who runs trade groups for both long- and short-term-care insurance. While long-term-care insurance is your best bet if you can afford it and meet the health qualifications, Slome says, "some insurance is better than no insurance."

But some in the industry are more skeptical that short-term-care policies offer real value to consumers. If you can afford to pay short-term-care insurance premiums, you may well be able to afford care in the short term without bothering with insurance. A 64-year-old in Nebraska, for example, can get a policy that will pay a $120 daily benefit for 100 days for an annual premium of $312, according to a quote provided by Premier LTC Brokerage, in Norfolk, Neb. If he pays premiums for 20 years before making a claim, he has paid $6,240 for a maximum of $12,000 worth of benefits. Some short-term-care policies offer even lower benefits of $50 per day -- just a fraction of a facility's cost.

Older consumers should also remember that Medicare often foots some of the bill for short-term care, says James Glickman, president of Life Care Assurance, a Woodland Hills, Cal., long-term-care reinsurer. If you need rehabilitation in a nursing home following a hospital stay of at least three days, Medicare may cover most of the costs for up to 100 days.

Coverage of Last Resort

Many people who want to purchase some form of coverage may find short-term care is their only option. Those who are declined long-term-care coverage as a result of conditions such as arthritis or diabetes, for example, may be eligible for short-term-care insurance, says Barbara Stahlecker, national marketing director at Premier LTC Brokerage.

Although it's difficult to make direct cost comparisons between short- and long-term-care coverage, given their varying benefits, Slome offers an example of how much older couples might expect to pay for each type of policy. A 60-year-old couple can get a short-term-care policy that provides $150 in daily benefits for up to 360 days, with a 30-day elimination period, for $1,235 annually, he says. (The elimination period is the number of days between the time you become eligible for benefits and when the insurer starts paying.) The couple would pay $2,170 a year for a long-term-care policy that provides the same daily benefit for up to three years, with a 90-day elimination period.

A benefit for single women: Unlike long-term-care insurance, which often charges single women 20% to 40% more than single men, short-term-care insurance offers unisex pricing.

Short-term-care policies also require you to jump fewer hurdles before collecting benefits. For example, long-term-care policies generally won't pay benefits unless your doctor certifies that for at least 90 days you're going to need help with at least two "activities of daily living," such as bathing and dressing. Short-term-care policies typically don't have the 90-day requirement.

For aging baby boomers, planning for long-term-care costs becomes more pressing every day. But the insurance that helps cover those costs is surging in price, while the benefits are becoming skimpier.

As costs rise, health care experts are engaging in a fierce debate about whether the coverage is worth the years of premiums. Even when people do go into a nursing home, those bills may not be as enormous as many people believe. Half of men and nearly 40% of women who use nursing-home care never have a stay exceeding three months, according to a recent study by the Center for Retirement Research at Boston College.

The overall cost of new long-term-care coverage has jumped roughly 9% over the past year, according to the American Association for Long-Term Care Insurance, a trade group. A married couple both age 60 can expect to pay $2,170 per year for $328,000 worth of coverage, up from $1,980 last year. Adding inflation protection, which helps the coverage keep up with the rising cost of care, would boost the premium even more.

Meanwhile, the most comprehensive benefits -- such as lifetime coverage and 5% compound inflation protection -- are now out of reach of most consumers because insurers have either stopped offering the benefits or made them unaffordable. So consumers must decide whether limited coverage is better than none at all.

New data may guide their decision. Although many consumers have traditionally thought of long-term-care policies as coverage for the catastrophic scenario of a years-long nursing-home stay, about half of new claims are for in-home care, says Bonnie Burns, policy specialist at California Health Advocates. And, she says, the common perception that a person in long-term care progresses from her home to an assisted-living facility to a nursing home "is really not proving to be true" in many cases.

Although some patients with dementia could spend many years in a nursing home, they tend to be the exception. The Center for Retirement Research found that men who need nursing-home care will spend less than 11 months in care, on average, while women will spend about 17 months. Such figures, combined with the rising cost of insurance, could point many middle-income consumers in one direction: to buy a scaled-back policy that would pay enough benefits to cover a short stay in a facility or a few hours of home care a day. Many people "may be overbuying their coverage," says Michael Kitces, director of research at Pinnacle Advisory Group, in Columbia, Md. "Most people don't have the long claims period we fear."

Wealthier people -- those with financial assets of perhaps $2.5 million or more -- may decide to forgo insurance. This affluent group can cover care costs -- and given the relative rarity of long nursing-home stays, their heirs will generally be better off if they don't purchase insurance, says Anthony Webb, senior research economist at the Center for Retirement Research.

People with more limited assets shouldn't purchase long-term-care coverage if the premiums are not well within their budget. "If you're not comfortable that you can continue the premiums indefinitely, you shouldn't be buying," says Claude Thau, a long-term-care insurance consultant in Overland Park, Kan.

Most people fall somewhere in the middle: They're willing to spend a certain amount of their personal savings on long-term care but also could benefit from a more limited policy and other strategies to fill in the gaps. Bonnie Belza, 61, a technical writer in Scottsdale, Ariz., bought a policy in her late thirties, after seeing her grandmother spend seven years in a nursing home. The policy has a daily benefit of about $190, but it doesn't have any automatic inflation protection, so Belza envisions using some of her savings to help pay the bills. She's also thinking about downsizing or retrofitting her house so that she can receive care at home. "The next time I fix a bathroom, there are going to be handles put on the wall," she says. The long-term-care policy is just "part of the overall strategy."

Assess your risk. To find the right policy, first determine the type of risk you're trying to cover. Consider your health, hereditary conditions and longevity in your family, availability of family caregivers, and personal preferences.

If you want to remain at home and have family members who can provide some care, for example, you may want to buy a policy with a relatively low benefit level. With the national median rate for a home health aide at $20 an hour, the policy could provide enough to cover the cost of an aide for 2.5 hours a day to give relatives a break. A married couple age 60 and 65, for example, would together pay about $1,500 a year for a three-year policy that provides a $1,500 monthly benefit with 3% compound inflation protection, Thau says. The $1,500 monthly benefit would cover 75 hours of home care a month.

Too often, Thau says, financial advisers discuss only higher benefit levels that would cover the cost of assisted living or a nursing-home stay. "You can get a small policy that can be wondrous" in terms of allowing you to remain at home without overburdening family caregivers, he says.

A policy that would cover most of the bills at a facility costs considerably more. Genworth, for example, currently charges a healthy 55-year-old married couple more than $6,700 a year for a three-year policy with a $150 daily benefit and 5% compound inflation protection. And today, that policy would cover only 60% to 70% of nursing-home costs -- the national median rate for a semi-private room is $220 a day, while a private room costs $250 a day, according to Genworth.

You could use this richer benefit to cover home health costs. But the $150 would cover just 7.5 hours a day for a home health aide.

To find the cost of home care, adult day health care, assisted-living facilities and nursing homes in your community, go to www.genworth.com/costofcare.

Cut the cost. Once you've considered the type of risk you'd like to cover, ask yourself, "how much of that risk can you transfer to the insurance company, and how much can you tolerate on your own?" Burns says. The first step is to choose a deductible, also known as the "elimination period," which is the number of days between the time you become eligible for benefits and the time the insurer starts paying.

Many policies offer a 90-day elimination period, but prepare to spend $22,500 out of pocket for nursing-home care until benefits kick in. The longer your elimination period, the lower your premium will be. A 90-day elimination period costs about 40% less than a zero-day deductible, says James Glickman, president of LifeCare Assurance, a long-term-care reinsurer in Woodland Hills, Cal.

Choosing a shorter benefit period will also cut your cost. A benefit period of three to five years "will cover the vast majority" of long-term-care needs, says Dawn Helwig, a principal at actuarial and consulting firm Milliman. Consumers "shouldn't feel like they have to buy the Cadillac policy," she says.

One of the most effective -- and controversial -- ways to reduce costs is to choose a lower level of inflation protection. The 55-year-old couple above, for example, could cut their annual Genworth premium roughly 60%, to $2,718, simply by switching to 3% compound inflation protection instead of 5%. And an increasing number of Genworth customers are choosing even cheaper options such as 2% or zero inflation protection, says Chris Conklin, the company's senior vice-president for product design.

Some financial advisers fear that inflation protection of 3% or less won't keep up with rising long-term-care costs. But depending on your budget and the type of risk you're trying to cover, more limited inflation protection may make sense. The national median hourly rate for a home aide has grown only 1% annually over the past five years, according to Genworth, compared with a 4% five-year annual growth rate for a private room in a nursing home. Of course, inflation could pick up in the future when you need care.

When comparing options, consider the impact of various levels of inflation protection on the size of your benefit at the time you're likely to use care. A 60-year-old couple, for example, can together pay $2,170 a year for a policy with a $150 daily benefit, three-year benefit period, 90-day elimination period and no inflation protection. That benefit is worth about $164,000 per person -- and has the same total value at any age. Or they can pay $3,930 a year for the same policy with 3% annual inflation protection, and the value of their benefit will grow to $325,000 per person at age 80, for example, and $365,000 per person at age 85, according to the American Association for Long-Term Care Insurance.

Another approach: Choose a policy with a "future purchase option," which has no automatic inflation adjustment, lets you pay a lower premium today and gives you the option of boosting coverage down the road. Such a policy would cost the 60-year-old couple above $2,239 a year, according to the association. "There's a lower cost going in, and that allows some flexibility to manage inflation over time," says Kamilah Williams-Kemp, vice-president of long-term care at Northwestern Mutual. But Burns warns that the future-purchase option can be "a dangerous concept." When adding inflation adjustments in future years, "you're paying more based on your age, and at some point you price yourself out," she says.

Buy early. People who determine that they want a policy have good reason to buy sooner rather than later -- ideally while in their fifties. Premiums will climb with each year you age. The 60-year-old couple above, who would pay $3,930 for the policy with 3% inflation protection, will pay $6,177 if they wait until 65 to buy.

Buying while still in good health has become more important as insurers tighten underwriting standards. Some companies have added blood-test requirements and started scrutinizing family health history for conditions such as heart disease and dementia. One-fourth of applicants age 60 to 69 are rejected, and 44% of those age 70 to 79 are denied coverage, according to the long-term-care association. Most companies won't issue policies to people over 75, says Jesse Slome, the association's executive director.

Married couples should consider a "shared care" rider, which allows couples to share benefits. If a husband and wife each have a three-year benefit period, for example, and the wife develops dementia and uses up three years of care, she can dip into her husband's benefits.

Single women face major challenges in the long-term-care insurance market. Because women live longer than men, insurers in recent years have begun charging single women higher premiums than single men -- often about 50% more. If possible, single women interested in coverage should purchase it through an employer, because unisex pricing is still available in the employer market. You can keep the policy when you leave your job.

Determine affordability. Premiums have been rising sharply in recent years because many assumptions insurers made when pricing policies in years past turned out to be wrong. Fewer people have dropped these policies than expected, and insurers have faced more claims than anticipated. At the same time, a long period of ultra-low interest rates has left insurers with lower investment earnings than they projected.

Insurers are allowed to raise premiums even after you buy the policy, so consumers must factor future premium increases into their budget. "People are buying policies today that won't pay off for 30 or 40 years, and there are so many unknowns," Genworth's Conklin says. "People should expect that rate increases are more normal than abnormal."

Some consumers seeking to avoid the risk of premium increases have gravitated toward hybrid products combining long-term-care insurance with life insurance. You typically pay a single upfront premium for a cash-value life insurance policy that will pay benefits early if you need long-term care or provide your heirs a death benefit if you don't need care.

But some advisers warn that this can be a very costly way of getting long-term-care coverage because consumers give up the opportunity to get market growth rates on a large lump sum of money. If you put $200,000 into a hybrid product and interest rates go from today's near-zero levels to 6%, Kitces says, the product is actually costing you $12,000 a year -- and "it's the most expensive long-term-care insurance policy in the history of long-term-care insurance."

Forgoing coverage can also be a costly decision, in terms of quality of life. People who know they have to cover their own long-term-care costs sometimes won't spend money on travel and other frills during retirement, Thau says. Those who choose to self-insure may even be reluctant to get the care they need. "I've seen people terrified of running out of money, so they never get the necessary care," Slome says.

People who feel strongly about getting the type of care they want may find long-term-care coverage well worth the price. Donna McCullough, 70, bought a policy at age 51 after her mother, who had broken a hip and entered a facility for physical therapy, was diagnosed with Parkinson's. The owner of a paralegal company in Columbia, S.C., McCullough decided that if she needed care, she'd like it to be in a good assisted-living facility. She's wary of having her choices restricted by relying on Medicaid. "I'd rather have a little freedom," she says. And as a divorcee with no children, "I don't really want to be cared for at home," McCullough says. "I'm too social for that."

Filing an insurance claim is often directly preceded by a traumatic event in your life. So the last thing you need is a fight with your insurance company to force it to pay. But you can take steps at every point in the process -- and even before a traumatic event occurs -- to help make sure you get satisfaction.

Says Angelyn Treutel, an independent insurance agent in Bay St. Louis, Miss.: “People who do some planning are going to get through the claims process most easily.” She has plenty of experience with tricky claims: In 2005, Hurricane Katrina’s storm surge engulfed her town and left her house in 12 feet of water. It was about a year and a half before Treutel could move back into her home, and at the same time she was helping clients get their claims paid, too.

Technology has helped smooth the claims process since then, says Treutel. Smart-phone cameras, insurers’ apps, Web tools and other resources can help you prepare before a claim, submit information and gather evidence to support your case if your claim is denied.

Even if you take preventive measures plus steps to file a hassle-free claim, you could find yourself losing a tug of war with your health, homeowners or auto insurer over how much it will pay. These tactics will help you fight back.

Health insurance

Health insurance claims earn the title of most complicated because you must deal with the complex relationship between your health care provider and your insurer. It doesn’t help that doctors and hospitals provide different deals for each insurer.

You’ll avoid many hassles if you know what your policy does and doesn’t cover -- and what it requires. For example, do you need to get preapproval to go to certain facilities? “You don’t want to wake up in the middle of the night with severe abdominal pains wondering if you’ll be covered in the ER automatically or if you have to notify your insurance company first,” says Tom Bridenstine, Virginia’s managed-care ombudsman, who helps people with claims questions and assists in appeals.

Also, find out how much your out-of-pocket costs will be for an out-of-network provider. Charges for such visits are a common source of complaints because the co-payments as well as the total cost may be higher than with in-network providers. And the claims process may not go as smoothly because the out-of-network provider hasn’t set up an electronic claims link with the insurer, says Ingrid Lindberg, of health insurer Cigna.

If you have questions about coverage for out-of-network care, call your insurer and “note the date and time, the person you spoke with and a brief summary of the conversation,” says Bridenstine. “I’ve seen that kind of detail help win many appeals if the rep from the insurance company inadvertently gave the wrong information.”

When you have a claim, compare the form you get from the doctor (called an encounter form) and the doctor’s bill with the insurer’s explanation of benefits (EOB). “Never pay a doctor’s bill until you get your EOB,” says Pat Pane, a medical claims specialist in Wilmington, N.C. The doctor’s office may have sent you the bill before filing the claim with the insurer.

How to fight back: A denied claim could just be an administrative problem. The insurer may need more information from the doctor, or wrong codes may have been entered somewhere along the paperwork trail. If addressing those items doesn’t solve the problem, don’t waste your time with “repeated phone calls over weeks and months,” says Bridenstine. “Go into the official appeal process.” That forces the insurer to respond in a timely manner. The denial letter usually outlines the appeal procedure.

Call your state insurance department for guidance before you file an appeal (find a link to your state’s department), especially if the claim is for a large sum of money. Be prepared to provide evidence from your doctors about why the procedure was medically necessary or why you needed to go out of network for care. If you aren’t happy with the results of an internal appeal, your state may offer an external appeals process with third-party medical experts.

Sometimes you need to provide extra paperwork if you have trouble getting some of the claim paid. Bridenstine recently helped a Staunton, Va., man file an appeal contesting a $37,013 bill he got from Mayo Clinic for prostate cancer surgery -- in addition to the $2,246 he paid for his deductible and co-payments -- after he had contacted his insurer for permission to go out of network for the care. The patient worked with Bridenstine to file an appeal with his insurance company. The appeal included information from his doctors justifying the medical need to go out of network, and his balance due was lowered to $437.

You can get extra help from a claims specialist. These professionals can help organize your claims paperwork, deal with the insurer, spot errors, collect extra documents from doctors, and help you file an appeal. Find one at www.claims.org. Expect to pay about $130 to $150 per hour.

Homeowners insurance

Insurers used to recommend making long lists of every item in your house and storing the records in a safe-deposit box. Now you can take a video of everything -- including your possessions and architectural details—with your smart phone and e-mail it to yourself. The Insurance Information Institute’s home inventory app (at KnowYourStuff.org) and the app from the National Association of Insurance Commissioners make it easy to save the information.

When you have a claim, gather as much information as you can as soon as possible. “Make sure you’re not putting yourself in danger, but take as many pictures as possible and take notes,” says Derek Ross, an independent insurance agent in Tarzana, Cal. In traumatic situations, it can be difficult to recall all the information later.

It helps to photograph the source of the damage, such as the source of a water leak, says Patrick Gee, senior vice-president of personal claims for Travelers. “Then there are many fewer questions about the cause of the loss.” Do what you need to do to prevent further damage, such as boarding up broken windows, but don’t start cleanup or other significant work until the insurance adjuster comes.

Filing a small claim could cost you a claims-free discount or trigger a rate increase, and filing a series of small claims could eventually get you dropped by your insurer. It’s better to pay small claims yourself and keep your deductibles high to benefit from lower premiums.

Use apps from your insurer that make it easy to send pictures and other records. Then keep in touch with your adjuster, either through e-mail or by phone. “Follow up once a week or so to find out if there’s anything else you should do,” says Treutel.

Set up a meeting with the contractor and the adjuster at the damage site. “It’s good to evaluate the damage from the same perspective,” says Gee. If you don’t have a regular contractor -- or if you have water damage or other special issues -- your insurer may be able to recommend some companies.

Keep receipts for hotel stays, meals and other extra living expenses while you’re out of your house; those costs may be reimbursed by the insurer. Also keep records of all supplies you buy to help contain the damage.

Contact the insurer if the contractor finds new issues after the repairs begin. “We might take a look at it again, and that’s a normal part of the process,” says Gee.

How to fight back: Every state insurance department has a free service to help you through the claims process and to make sure you’re getting everything you’re entitled to under your policy, says John Huff, Missouri’s director of insurance. Huff says that, mostly due to the devastating tornado in Joplin, Mo., his department had 21,000 inquiries last year and recovered an extra $19 million in claims payments for consumers. If your area has had a major disaster, your state insurance department may set up a special appeals process.

Your state can help even when there’s no major disaster. “It’s amazing how quickly many claims get paid once you contact us,” says Monica Lindeen, Montana’s commissioner of securities and insurance. “And sometimes just threatening to contact us can help.”

Don’t jump at an offer from an independent adjuster to provide extra help before working with your insurance company and state insurance department. Freelance adjusters charge a percentage of your payout -- typically 10% to 15% of the amount recovered. In Joplin, as well as areas affected by Hurricane Katrina, some public adjusters showed up right after the storm and tried to get people to sign on with them before going through the claims process with their insurer. If you decide to use a public adjuster, be sure he or she is licensed with your state insurance department.

Auto insurance

When you’re in an accident, don’t just exchange insurance and contact information with the other driver. Take pictures of everything with your phone’s camera -- your car’s damage, damage to the other car, the accident scene, and the other driver’s license plate, registration and insurance card. Get contact information from any witnesses. Then contact your insurer or agent.

Some insurers, such as Chubb and Travelers, have apps that walk you through the claims process and let you upload the photos and an audio or written description directly to your claims file. Travelers’ Auto Accident Help app produces a detailed accident report that you can send to any e-mail address. If the police arrive and write up an accident report, get the report number.

You can generally use any repair shop to get your car fixed, but taking your car to a repair facility on the insurer’s recommended list may expedite your claim. Some insurers have special one-stop claims facilities where you can take your car, meet a claims representative and arrange for a rental car.

How to fight back: If your body shop says it will cost more to fix the car than the insurance appraiser says, provide a detailed estimate from the shop to the insurer. Sometimes the difference can be a result of policy specifics -- if, for example, your insurance covers after-market parts but the body shop wants to use original manufacturer’s parts. You may also have the right to get an “independent appraisal” -- you get an appraisal yourself and a third party weighs that along with the insurer’s appraisal and settles on the number. (This is usually called the “appraisal clause” in the policy.)

If the insurer says your car is totaled -- because it will cost significantly more to repair your vehicle than it’s worth -- and you disagree on the value it has assigned, make a case for why your car is worth more. Compare the selling prices of used cars the same age and in similar condition in your area (you can see local ads at Autotrader.com) and check used-car values at Edmunds.com and KBB.com.

It can also help to get your agent involved; sometimes he or she can help speed the claim along or ask for specific information from the insurer about why the payout was lower than expected. If the claim payment is still too low, enlist the help of your state insurance department.

What are the most common types of complaints state regulators receive about insurance companies?

The National Association of Insurance Commissioners gathers complaint information from state insurance regulators. As of late July, the top complaint had to do with claims payments -- claims-handling delays (19.1%), followed by denial of claims (17.9%) and unsatisfactory settlement offers (15.0%). You should be concerned if a company you're considering has a lot of complaints in these areas.

The next category of complaints revolves around underwriting -- the insurer's process of accepting or rejecting applicants and setting rates. Premium and rating accounted for 4.8% of the complaints, and policy cancellation for 4.2%. The breakdown was similar to the 2008 figures.

The type of insurance policyholders had the most complaints about was accident and health insurance (37.7%), followed closely by auto insurance (33.7%). There were fewer complaints about homeowners insurance (12.71%) and life insurance and annuities (10.4%).

When you're shopping for an insurance company, check the insurer's complaint record -- especially if it's a small insurer that's offering a good rate, but you haven't heard much about its reputation. Saving a few dollars per year in premiums can backfire if the insurer hassles you at claim time.

To access this information, go to the National Association of Insurance Commissioners' Consumer Information Source. Type in the name of the company, the state where you live and the type of insurance. (Under "statement type" and "business type," click on "property/casualty" for home and auto insurance or "life, accident and health.") The site then provides the insurer's national complaint statistics.

Focus on the complaint ratio, which shows the ratio of the company's U.S. market share of complaints to the company's U.S. market share of premiums for a specific policy type (the ratio puts the complaint figures into perspective based on the size of the insurer's business, so larger insurers aren't penalized for having more complaints). Compare that figure with the national median: If the national median complaint ratio is 1.00 and the ratio for the company you're considering is 2.00, for example, that should be a red flag. Also look at the complaint trend report to see whether the company's complaints have been increasing or decreasing over time.

If the insurer's complaint ratio is high, check its record at your state insurance department and find out whether any enforcement actions have been taken against the insurer. You can find links to your state insurance regulator at the National Association of Insurance Commissioner's state insurance department map.

It's important to report any problems you have with an insurer to your state insurance department. You go on record as having complained, and the regulators can investigate the complaint. Then it can be included in the figures to help warn other people about potential problems with the insurer. Plus, the regulator may be able to put extra pressure on the insurer to resolve your complaint.