Preparing for your future long term care needs is necessary. But with the rising costs, how do ensure full coverage when the time comes? By comparing long term care insurance companies and choosing the best one.

Long term care insurance policies help pay for your long term care, whether you choose to receive it at home or in a facility. Unlike the limited coverage that Medicare provides, long term care insurance policies provide a tailored coverage designed to fit your needs.

However, the assurance of full coverage can depend on the long term care insurance company you purchase a policy from.

Individuals have a wide range of long term care insurance companies to choose from, but how do you determine the right one for you?

Commitment to Long Term Care Insurance  

The market can be hard to predict at times, and if the company’s commitment is not as firm as the best companies, they will not be able to stay long when the situation gets critical.

Another indicator to look out for is the company’s dedication to long term care. Look into specific actions that companies do to illustrate their commitment. One great example of this is Northwestern Mutual’s move to form a separate company that sells long term care solely.

Company Financial Strength  

Many individuals who purchased a policy will not need it for about 10 years or so. This why it is extremely important to choose a company that is financially strong enough and established enough to ensure that it will be around in the next couple of decades.

A great deal of financial resources is necessary to introduce a new product, build market share, and reach a critical mass of premium income that eventually starts producing profits. Often, it is the top long term care insurance companies, with their years of experience and deep pockets, that come out on top when the market changes.

Reviews and Ratings  

A financially stable insurance carrier is at a lower risk of going out of business in the following decades. Every policyholder’s worst nightmare is to spend a sizable amount of money and time paying insurance premiums, only to find out that the company will not be able to cover the costs because they did not survive the competitive market.

To keep this from happening, look into the ratings from AM Best, Moody’s, or S&P Global Ratings (formerly Standard & Poor’s Ratings Services). Below are individual rating guides to assist you.

AM Best Company Financial Strength Rating Scale

RatingsDefinitions
A++ and A+

Superior

These are the companies that display superior ability to meet their ongoing insurance obligations.
A and A-

Excellent

These are the companies that display superior ability to meet their ongoing excellent obligations.
B++ and B+

Good

These are the companies that display a good ability to meet their ongoing insurance obligations.
B and B-

Fair

These are the companies that display a fair ability to meet their ongoing insurance obligations. The company’s financial strength may be affected by adverse changes in underwriting and economic conditions.
C++ and C+

Marginal

These are the companies that display a marginal ability to meet their ongoing insurance obligations. The company’s financial strength may be affected by adverse changes in underwriting and economic conditions.
C and C-

Weak

These are the companies that display a weak ability to meet their ongoing insurance obligations. The company’s financial strength may be affected by adverse changes in underwriting and economic conditions.
D

Poor

These are the companies that display a poor ability to meet their ongoing insurance obligations. The company’s financial strength may be affected by adverse changes in underwriting and economic conditions.

Standard & Poor’s Long Term Insurer Financial Strength Ratings

RatingsDefinitions
AAAThis is the highest rating of Standard and Poor’s, and it is given to companies that have extremely strong financial security characteristics.
AAThis rating is given to companies with very strong financial security characteristics. The difference from the highest rating is only marginal.
AThis rating is given to companies with strong financial security characteristics but is somewhat vulnerable to adverse business conditions.
BBBThis rating is given to companies with good financial security characteristics but is more likely vulnerable to adverse business conditions.
BBThis rating is given to companies with marginal financial security characteristics. While the companies have positive attributes, but adverse business conditions can significantly affect their financial capabilities.
BThis rating is given to companies with weak financial security characteristics. Adverse business conditions impair their financial capabilities.
CCCThis rating is given to companies with very weak financial security characteristics. Their financial capabilities are also dependent on favorable business conditions.
CCThis rating is given to companies with extremely weak financial security characteristics. These are the ones unlikely to meet some of its financial commitments.
RThis rating is given to the companies under regulatory supervision owing to their financial conditions.
SD or DSelective Default and Default ratings are given to companies in default on one or more of their insurance policy obligations but are not under regulatory supervision.
NRThis is designated to companies that have not been rated.

 

Moody’s Global Long Term Rating Scale (Insurance Financial Strength Ratings)

RatingsDefinitions
AaaThis rating is given to companies with exceptional financial security.
AaThis rating is given to companies with excellent financial security, but with marginally greater longer term care risks than Aaa-graded companies.
AThis rating is given to companies with good financial security. However, some elements suggest that stability might change in the future.
BaaThis rating is given to companies with adequate financial security. The companies may lack certain vital elements or may be unreliable over time.
BaThis rating is given to companies with questionable financial security. Their abilities to meet regulations are moderate which means that they might not be able to ensure it in the future.
BThis rating is given to companies with poor financial security.
CaaThis rating is given to companies with very poor financial security. These companies display strong elements that could mean delay or inability regarding claims and obligations.
CaThis rating is given to companies with extremely poor financial security.
CThis rating is given to companies with extremely poor prospects of providing financial security.