Unfortunately, long-term care insurance (LTCI) policies are not standardized—provisions contained in policies vary greatly, and premiums charged vary as well. Therefore, it is important for you to compare to get the best policy possible—at the best price.
And if you already own an LTCI policy, you might wish to consider changing plans or upgrading coverage. This would be appropriate, for instance, if you’re in good health and have an old LTCI policy that was highly restrictive—perhaps it required you to have a prior hospital stay before benefits would begin. Most of the newer policies are less restrictive. Also, most of the newer policies offer inflation protection, another advantage.
How should you compare companies?
You should compare several companies and agents before you buy an LTCI policy. And it’s important to review the financial strength of the companies you’re interested in. You can do this by reviewing the company’s A. M. Best Company’s rating along with the opinions of other rating services, such as Moody’s or Standard & Poor’s Insurance Rating Services, at your local library.
If you decide to go with an A. M. Best rating, you should select an insurance company that has received a rating of at least A or A+ from A. M. Best. This means that the insurance company is excellent or superior and entails very little risk. The following chart outlines the various ratings:
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Company Rating
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A.M. Best Score
|
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Superior (little risk)
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A++ or A+
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Excellent (slight more risk)
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A, A-
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Very Good (strong claims-paying ability)
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B++, B+
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Fair (less protection against risk)
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B, B-
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Marginal (relatively high risk factor)
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C++, C+
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Weak (high risk factor)
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C, C-
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|
Poor
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D
|
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Under Regulatory Supervision
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E
|
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In Liquidation
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F
|
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Suspended
|
S
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Of course, you can also review the company’s financial statements to determine its financial stability. Review the annual report and find out how long the company has been in business.
How should you compare policies?
Before analyzing different policies, you should complete the following steps:
- Obtain sample policies and outlines of coverage from each carrier you are considering. The outline of coverage summarizes the policy’s benefits and highlights the important features.
- Review the company’s rating and financial strength.
- Determine the current cost of long-term care in the area you live (or in the area in which you intend to move). You can do that by contacting nursing homes, home health care agencies, adult day cares, and state elder affairs offices.
Next, you need to read the actual policies carefully, making sure you understand each provision. After you’ve made sure that each policy contains the provisions you desire, you’ll want to compare prices. Finally, you might want to consult with an agent, financial planner, or other professional to ensure that you’ve selected the policy that will best suit your needs.
If you have questions, contact the Experts at Henssler Financial:
- Experts Request Form
- Email: experts@henssler.com
- Phone: 770-429-9166
Disclosures: The following information is reprinted with permission from Forefield, a division of Broadridge Financial Solutions, Inc. This article is meant to provide valuable background information on particular investments, NOT a recommendation to buy. The investments referenced within this article may currently be traded by Henssler Financial. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. The contents are intended for general information purposes only. Information provided should not be the sole basis in making any decisions and is not intended to replace the advice of a qualified professional, such as a tax consultant, insurance adviser or attorney. Although this material is designed to provide accurate and authoritative information with respect to the subject matter, it may not apply in all situations. Readers are urged to consult with their adviser concerning specific situations and questions. This is not to be construed as an offer to buy or sell any financial instruments. It is not our intention to state, indicate or imply in any manner that current or past results are indicative of future profitability or expectations. As with all investments, there are associated inherent risks. Please obtain and review all financial material carefully before investing. Henssler is not licensed to offer or sell insurance products, and this overview is not to be construed as an offer to purchase any insurance products.
