Choosing The Right Long-term Care Insurance Provider
The success of long-term care depends on the strength of your insurance provider. Long-term care insurance is seriously expensive, so youd better not risk your lifetime savings on a company that will shut down or go bankrupt in the future. Its important to keep a keen eye and conduct background check on your potential insurer to prevent the worst financial decision youll make in your entire life.
Financial Strength and Size are Crucial
The first two factors that you should look at a company are its strength and size. Small, poorly rated companies selling only two or three types of insurance, including LTCi are not the ones to trust and are the most vulnerable to economic loss. Companies with limited experience dont have actuarial guidelines for the premium reserved for claims 20 to 30 years from now. A large company with sufficient reserves will be able to pursue its service to claimants despite of unfavorable claims conditions. Otherwise, a small, poorly rated company has little chance of surviving the test of claims.
Another reason for considering the strength and size is the current market environment. The current market is not large enough to favor all insurance companies. The reality is that it takes some massive investments to launch a new product, build or expand market share, and attract the premium income that will start producing profits. Only large, successful companies have their resources to stand still on the wobbling economy and expand their market share despite the aggressiveness of their competitors.
The Commitment to Long-term Care Insurance
It takes commitment for a company to pursue its visions for the policyholders. A company with commitment to its business strives harder to have cutting edge in the industry. A good sign that a company is committed is the level of resources the company has to expand or improve its long-term care business. For instance, we can say a company is committed if it acquires a few more company related to long term care or form a company that focuses solely on the sale of LTCi.
Another sign is the amount of market share the company owns. Evidently, the bigger the market share a company has means the longer the stay of the company primarily for its financial obligations. Bigger companies can only perform those roles.
The insurance regulators ensure that the rate stability of LTCi is favorable for older policyholders with fixed incomes to help them keep up the costs. Good LTCi companies try its best to keep the increases under control and avoid unreasonable increments.
However, it is painstaking to distinguish which company will file premium increase in the future. One alternative way to check if the company has adequate premiums is through the Long-term Care Experience Reports published annually by the NAIC.
The second useful indicator is the companys underwriting philosophy. The underwriting can determine the companys approach to obtaining bid information, benefits offered, and the participation rates. According to study conducted by Millman & Robertson Inc., companies with underwriting procedures have 3 times the claims loss ration during the first three years compared to those with tight underwriting.
by: Christine Walker