I often get asked which companies are “the best” and which are “bad”. My answer to that is that it depends on what criteria you are using. It is like asking “who is a good athlete”? A “good” baseball player at 15 years old is not the same as a “good” professional player. And a “good” professional baseball player is not the same as a “good” professional football player.

As with sports, so with insurance.

In general, good insurance companies tend to be those with a wide diversity of products in their portfolio because it spreads the risk. A company that specializes only in a single type of coverage is more likely to experience catastrophic loss. Further, companies that have national coverage are less likely to have catastrophic loss than those who are only in a geographic area. To take it to an extreme, if you had a company that insured houses only in Florida, the first hurricane would devastate the company. Companies that have national reach and wide diversity of products are more likely to remain financially sound.

That said, most long term care insurance companies are primarily in the health and disability world. They have national coverage, but they also are focused on illness, disability and life. Very few have the full mix of insurance products.

So what then, do we look for, specifically, in long term care? Well, this is what I recommend:

• Buy a contract with a company that has good financial ratings with Standard and Poors, AM Best, etc. You want a company that is strong financially.
• Buy with a company that has a history with this product. Newer companies have no history of claim payments, rate raises or complaints to examine. They may be great – but we won’t know that until we have a few years experience with them.
• Check out their rate raise history. Rate raises will tell you how good they have been at pricing. Cheaper now is not always better – though it might be. If they have a history of underpricing to attract business and then raising rates after you own it, you should be leery. But don’t be put off if companies have had one or two rate increases with business that is 20 years or more old. One or two is normal in the industry to date – 6 or 7 is not.
• Look at their complaint index with the insurance commissioner of your state. A company with an abnormally high complaint index may indicate they don’t service the block well or have lots of rate increases. Be forewarned that companies whose complaint index is 0 are not, defacto, “good”. If they have very small blocks of business or have been around a short time, they may have a zero…but only because there isn’t really enough info to have valid data.
• Do not be worried if you hear they have been sued – especially if you are reading blogs where people rant about insurance companies. I would hazard every insurance company has been sued at some point. Being sued doesn’t make you a bad company nor does having someone rant about you on insurancecomplaints.com. If you want to investigate from this viewpoint, you need to be looking at which companies have lost class action suits. Onsey-twosey suits and rants are folks who are just mad. Class action and loss means there was a serious breach of faith on the contract.

So is Mutual of Omaha a “good” company?

Sure. Right now, I would say this company is a good bet in today’s market. I can’t promise you they will always be a good bet – 20 or 30 years in any business is a long time. Mutual of Omaha has been around a very long time – they have weathered the ups and downs and are still here honoring contracts. From the view I see right now, they are a good company.

 


 

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