Today in an article from the Palm Beach Post, someone writes in and asks why anyone would buy a long term care insurance policy if the company has complete control over:
- Claims Paid - the insurance company can accept or deny claims
- Rate Increases- the company can increase rates if it needs to down the road.
Liz writes back to the reader and points out that virtually every insurer and type of insurance falls under the same set of rules. She reminds them that the claims process is heavily regulated by the state department of insurance. The insurance business is not a free market. It is so heavily regulated that it cannot slight customers without recourse. The long term care policy, like any policy, will spell out exactly what is covered, for how long, and so on.
Long Term Care Insurance Facts
Regarding long term care insurance rate increases, the companies cannot raise individual rates. They must apply with each state to raise the rates of all policyholders in a class. The state regulators will then study this request and can either approve it or deny it. Should they approve it, it would only be because in their estimation the company was about to be in a situation where it may not be able to pay claims anyway!
I like to tell my clients this: If a company guaranteed no rate increases EVER and then down the road it realized that it was paying more in claims than it had expected, it would be forced into bankruptcy. The company would then pay NO claims, which for many policyholders would be even worse than a rate increase.
Summary on Rate Increases
Liz of the Palm Beach Post points out, and I will reiterate, that the key is to find a financially stable company that is not likely to stumble in the future. Going with a no name company in search of lower initial rates can be dangerous. Here at our brokerage, we provide only quotes from companies with an A rating or better. These are the companies you'll want to focus on. Request a quote today and you'll be able to see your exact prices for quality companies that are much less likely to raise rates in the future, simply because of their sheer size and credit ratings.
