How Do I Pick a Long Term Care Insurance Carrier?

Buying a long term care insurance policy is a lot like shopping for a home, car or other large ticket object – it won’t be cheap and you are going to live with the choice for many years!

So be cautious in ONLY looking at the price. While price is important when buying long term care insurance, (and we always recommend you work with a broker who can help you do some shopping – sometimes you can save several hundred dollars per year on price just by changing long term care insurance carriers….other times your health may drive you towards one carrier or another. But that is another blog!).

Here are a few of the things you should ask about and look for:

1) Financial Ratings.

If you do not know how A&M Best or Standard and Poors works, ask for the Comdex score. This is an amalgamated score of all the various methods and works more like grades in school. Anything over 90% is top notch. If it gets into the 70% bracket or below you had better start asking a few other questions…like, does the long term care insurance carrier have a parent company that is strong. If it really is a stand-alone company and has ratings below 80%, you may want to think about another carrier.

2) Rate Raise History.

There are no long term care insurance carriers left in the market that have never had a rate- raise to my knowledge. All of them have had at least one – but, really this should not be shocking. How many things do you know that have had the same price for 25 years or more? So, the goal here is not to find one with NO rate increases ; it is to find ones that have been relatively stable. Companies that have been in the industry for 20+ years would be “stable” if they have had one or two increases on their existing client base over that window of time. Younger companies should have fewer. If companies have been around that long and have had 3 (or in some cases 6 or 10!), you may want to reconsider them as an option. To be certain, the history of rate raises isn’t a guarantee of future performance. But their history does give you some idea if they are attempting to price correctly up-front .

3) Complaint Index.

Most insurance commissioners maintain a complaint index – it is a scale that rates long term care insurance carriers according to how many complaints are filed each year. Many insurance commissioners now make that information public on their websites. If you can’t find it on the website you can call and ask for it – you have paid for it with your tax dollars after all. You want to be looking at long term care insurance carriers who have a below-average complaint index. Use some commons sense however when you look at the numbers. A very small company with a zero complaint index may still be a questionable buy because – with small numbers – they SHOULD have no complaints. Conversely a company that has a large block of policy holders may have a larger number of complaints and still be a good candidate. If you don’t know how to read the information, a good broker can help you with that.

4) Larger blocks of business.

Remember that when you buy a long term care insurance policy you will hold it for 20 to 30 years before you use it. It you buy a company that has a small block of policy holders, you can’t guarantee that they will still be hiring staff 30 years from now to service that block of business. Typically really small companies re-sell their block to larger companies. So of the 4, this is perhaps the least important. But if all other things are equal, stick with the big dogs in the industry when buying a long term care insurance policy.