Having a company raise a premium because of legitimate claims and good intentions does not make them a bad company or mean you should not consider their portfolio. In some cases these companies become stronger and more consistent. For many companies the problem lies in the demand for a benefit rich policy at a competitive price without a lot of claims experience. In spite of this, the true Long Term Care insurance professionals should not and will not support insurers that prance into the market with rates far below the norm to gobble up market shares, fully intending to raise premiums. Many smaller companies are more comfortable with the concept than big insurance carriers, and some are in hopes of selling their blocks of business to a larger conglomerate. This practice can be menacing to the marketplace as a whole. The good news is the Departments of Insurance across the country are tightening up on companies offering products that appear "too good to be true." Tom Foley, chair of the Life & Health Actuarial (Technical) Task force and The National Association of Insurance Commission are working on a campaign with carriers to develop a rate stability method for long-term care insurance. But in the meantime, it is vitally important that our government, advocates and insurance people don’t send the wrong message to potential purchasers; telling them to compare one policy to another using premium cost – that’s exactly what motivates the insurers to create the "too good to be true" premium rates! That’s the message; simply buy the one with the lowest rate. That is not how you should compare long term care insurance – maybe other products but not this one. Rate stability is the key to your financial security…Preferred underwriters have a more stable future for the younger and healthier. In the real world there are many of us who do have health challenges that make us uninsurable. In contrast it makes the coverage more important to your future; however, the key is in the premiums now and in the future. Good underwriting interpretation starts with a good agent or long-term care marketing company who are well trained in underwriting practices of the carriers! They help clients first by finding the right company based on their current health conditions and work with the carrier that has a proportionately premium structured for the type of risk they are insuring with the minimized potential of them raising premiums. Having a health challenge does not mean that you always have to go with a substandard underwriter. There are many top carriers that have a good handle on health conditions that may be insurable even at preferred rates. That's were LTC specialists can really earn their commission; i.e., by serving your interests and needs first. The long-term-care market is relatively new, and has not unfolded its full market and product potential. Therefore, you should tread lightly as there are a lot of unknowns. One of the biggest elements that can change the claims curve will be assisted living facilities. With this option becoming a more welcomed alternative the length of stays could blind-side the actuarial tables in the distant future. Word of advice: Watch out if any agent or marketing organization claims their company will not raise rates unless you purchased a single premium, 10, or 20 pay plan with lifetime rate guarantees. These premium alternatives do force the policy to be a non-cancelable benefit. In today's market a Lifetime rate guarantee is worth a hard look, in short term premiums are higher, in the long term they may have an extremely positive effect in your planning. Only a handful of companies offer this type of feature.It should be noted some 10-year pay and 20-year pay plans are not rate guaranteed. Ask your LTC specialist to provide the companies past rate performance, underwriting practices, and how to they compare to the top long-term care carriers in premium structure. Cheap premiums with rich benefits can come to haunt you later. Premiums that are in line with the pack is a smarter financial decision that could lead to better rate stability. Be prepared that guaranteed issue plans that are hitting the group market have a potential of being a premium time bomb. This concept only makes sense when you have a young enough block of business to offset the older block. In most cases the younger ones will be hit the hardest over time with rate increases. Individual underwriting may still be a better practice for that market. If people are still active and working they are a more desirable risk. RATE INCREASES BY INSURER* The following insurers have already implemented or are planning to implement rate increases on the premiums of existing policyholders in one or more states:
Source: "Rate Increases by Long Term Care Insurance Companies, Research Findings: September, 1999." Copyright Larson Long Term Care Group. |
