There are a number of Long Term Care Insurance companies in the US . The Top 7 companies
between themselves had 72% of the Individual LTC Insurance sales in 2003. The figure
below shows the market share of these various companies in 2003 for individual LTC
Insurance Sales.
The figure below shows the Individual LTC Insurance in force in 2003 by the various
carriers.
Picking the right carrier for your Long Term Care Insurance needs is of utmost
importance. While the premiums are paid initially, the care is required afterwards.
The carrier should be financially sound and should be a company, which is more likely
to be around for a long time. One should consider the following factors choosing
a carrier:
The financial strength of a company is partly represented by its assets.
While a big company would have higher assets, it is does not automatically follow
that a big company is financially sound. The financial strength comes from what
is called the solvency ratio . This ratio tells you how much assets
the carrier has for each $100 in liabilities. Higher this ratio, the higher is the
financial strength. This is because the liabilities (and these are the benefits
they will provide to you) will come from the assets of the company. If assets are
higher, you are safer since even if assets go down a little, they would still cover
the liabilities. Another factor to look for is called Surplus Funds
. This is given per $100 of Policy Reserves and indicates the ability of a carrier
to take care of emergencies. The policy premium is generally based on actuarial
valuation, but sometimes there could be more claims coming in than anticipated.
A higher surplus ratio helps the carrier in such situations.
The credit rating gives an indication of the overall financial health of
the carrier. Higher the rating, the better the financial health. There are various
credit rating agencies in the US and they give different ratings. One should be
clear of what a particular rating given by a rating agency means. The most widely
followed ratings in the insurance industry are by A.M. Best
This can be ascertained from the number of offices the carrier has, and the
number of agents. What is the carrier’s record in claim servicing? How much
time does the carrier take in servicing a claim? What is the ratio of claims pending
to total claims? These parameters would give you an idea of the efficiency of a
carrier. When it is required, fast claim processing is of utmost importance; therefore
ease of service should also be an important criterion in selecting a carrier.
You should select a carrier who gives coverage as per your needs and the
costs involved. The carrier should give only coverage for the required needs. The
carrier should not load premium for requirements, which you have not asked for.
Read the policy carefully to see that it provides for only the coverage needed.
The question to ask is: Does the carrier customize the policy to satisfy your requirements?
Does the carrier have various options available for you in making your periodic
payments? This gives you greater flexibility in managing your cash flows.
Insurance policies by nature are complex, with a number of clauses and exclusions.
You should choose a carrier who explains in simple language what the policy is all
about and details of what is excluded and what is included. If possible get this
documentation separately so that there are no delays in claim settlement.