Long-Term Care Insurance:                          Choosing the Right Insurance Carrier

All the other details of coverage, including benefits, premium rates, tax advantages, and more, are irrelevant if you choose the wrong company.

At the time of claim, the depth of commitment, integrity, and financial strength of the insurance company is what matters most.

History proves that most insurance companies that enter the LTC insurance market will not remain in the market for an extended period of time. Therefore, the majority of insurance carriers offering coverage should be avoided.

Narrow your choice of companies to those that are highly committed to the industry, have a strong history of premium stability, and have published their claim's payment history.

Here are some guidelines for selecting such companies:

1. Longevity in the Long-Term Care Insurance Industry

The longer a company has been in the LTC insurance business, the more likely they are to remain in the business. As a general rule, it's best to select an insurance company that has been in the market for 10 years or longer.

Avoid companies that enter the market, exit the market, and then re-enter the market again. This indicates a lack of commitment to the LTC insurance Industry.

2. Financial Ratings

Don't believe the myth that the financial ratings of an insurance company are not important. To the contrary, a strong financial rating is vital to the future of your investment in long-term care insurance coverage.

If you are in excellent health you should select a company with an A Plus rating by the A.M. Best Fnancial Rating Service.

If you have minor health conditions and cannot obtain coverage with such a company, consider coverage with an A rated company. 

NEVER choose an insurance company rated less than A by A.M. Best. 

3. Name Recognition of the Insurance Company

Recognizing the name of the insurance company is another indicator that the company will remain committed to the market. Companies that have built name recognition and have protected a brand name over a number of decades are more likely to continue protecting the reputation of it's name.

In addition,large name companies rarely make short-term decisions, such as entering a market without first researching it thoroughly.

4. Approved as a "Partnership" Company

Companies that have been approved as a Partnership company are superior to non-partnership companies because they have gone through a stringent approval process that indicates a major commitment to the long-term care insurance industry.

Even if the Partnership program is not available in your state, you still want to consider companies that have been partnership approved for other states.

Most of these companies also offer traditional LTC insurance in most states and choosing one of these companies offers better odds for rate stability and a smooth claim's payment experience.

5. Rate Increase History

Since policies are subject to rate increases, it's important to always ask about the rate increase history of the carrier being recommended. Consider only insurance companies that have demonstrated reasonableness in their rate increases.

6. Reasonableness in Premium

Choosing a company that has a lower than average premium rate could spell disaster for you in the future. This is one of the few industries in which shopping for the lowest price, combined with the most generous benefits, is not a wise decision. Since no company operates in a vacuum, insurance carriers with rates lower than the average market premium will raise rates substantially in future years.

At the same time, it isn't wise to purchase coverage from a company with substantially higher than average premium rates. Reasonableness in premium rates is the best approach to selecting an insurance carrier you can trust.

7. Stringent Underwriting Process

For people in good to excellent health, it's best to select an insurance carrier with a rigorous underwriting process. Doing business with an insurance carrier with a conservative underwriting philosophy is the best strategy for keeping your premium rate stable in future years.

A stringent underwriting process is also your strongest indication that the insurance carrier will be in a good position to pay your claim in the future and will be less likely to substantially raise your rates along the way.

Unfortunately, a rigorous underwriting process is not good for people in poor health. But people in poor health are very fortunate if they can obtain long-term care insurance at all. Current trends in underwriting with all quality carriers indicate that people with health problems will soon be unable to obtain LTC insurance.