How Do I Choose A Good long term care insurance Company

By Robert (Mac) McClure

Once you have decided to take a serious look at long term care insurance then the question is where do you start? Start by looking for a company that meets the recommended standards for an excellent or superior rating. In order to achieve a rating like this a company must meet certain requirements. Look for:

  • Financially Sound Companies

Check the various insurance company ratings with the organizations that rate the strength of insurance companies.
Where do I get this information? Generally you can get a good look at the company’s financial strength by looking at their A.M. Best rating ( www.ambest.com). If you want to look deeper then you can go to Standard & Poor, Moody’s, Fitch, Duff & Phelps or Weiss Research. The rating updates are published monthly, quarterly and annually and can be found in any public library. A.M. Best usually gives a very good overview of the companies strength and the companies don’t have to join the rating service in order to be rated.

  • Committed Companies With A Large Client Base

“The theory of large numbers” works here. The larger the client base the better buffer you have against rate increases. As claims come in the companies need to financially spread these over their client base.  If larger claims come in than forecasted then the company has to decide whether to absorb this into its projected cost of business or to pass this along to policy holders in the form of a premium rate increase. Companies who have made a major commitment to this line of business normally do not raise premiums on a regular basis. A smaller, uncommitted company may be more inclined to do this.
Where do I get this information? Each company web site should have their policyholder information readily available. Additionally an LTCI specialist will have the company’s marketing materials, approved by the state that gives policyholder information. In addition, you can get more information from the rating agencies, A.M. Best etc

  • Claims Paying History

Sometimes a good financial rating may not tell the whole story. Some companies with good ratings have been known to deny or delay paying claims in health insurance. It is important to ask how many claims have been paid since they started selling LTC insurance.
Where do I get this information? Call your state insurance department for information on the complaints filed about specific companies. If this is not available then sometimes you need to use your own judgment based on size and reputation of the company. A well-known company is less likely to risk bad publicity for this type of action.

  • Length Of Time Selling LTC Insurance

The Company that you choose should have been selling long term care insurance since the early 1990’s. If they haven’t then they probably have not been in the business long enough to have experienced enough claims. Without good claims experience then a company can’t tell if they have set their premium rates correctly. You do not want a company to find out that they set them wrong to begin with and you are the recipient of a “rate adjustment”.
Where do I get this information? Once again if you look at the same sources from the above items you will find this information. The state approved company marketing materials will have this information as well as an informed LTC insurance agent.

  • History Of Rate Increases

Any company that has had several rate increases to its existing clients should not be a company for primary consideration. There are some companies that are exceptions to this, especially when it comes to your personal health issues.  Sometimes you have to go to a company that takes higher risks and therefore has to make adjustments to premiums more often.
Where do I get this information? You can always contact your state department of insurance and ask them, or ask your agent. However, a sure fire way to do it is to ask your agent for the first page of the long term care insurance personal worksheet for that particular company. This is a part of their application and will always show their rate increase history.

  • Finally!

Now we know what to look for in a good company. The ideal company will be very large and financially sound. It will have a lot of long term care insurance clients and will have sold these policies since the early 1990’s. In addition it will not have any complaints with your state insurance department concerning the payment of claims. And finally, the ideal company will have a good reputation and will not have increased rates to their existing clients very often.