Buyer Beware: The 5 Worst Long Term Care Insurance Companies
You’ve been thinking about getting long term care insurance to protect your nest egg if you ever need extended nursing home or home health care. Smart thinking – most of us will need that kind of care at some point. But beware: some insurance companies have terrible reputations for denying claims or jacking up premiums after you sign up.
Steer clear of those bad apples. We researched the long term care insurance industry to uncover the five worst offenders. In this article, we’ll name names so you can avoid these companies if you decide to buy a policy. Don’t get stuck paying premiums to a company that won’t deliver when you need them. Learn which insurers operate in bad faith so you can make an informed decision.
Table of Contents
What Is Long Term Care Insurance?
Long term care insurance helps cover the cost of long term care services like nursing homes, assisted living facilities, and in-home care. As the population ages, the need for long term care is growing. Unfortunately, the high costs often come as an unpleasant surprise for many families.
Long term care insurance allows you to plan ahead and pay for long term care costs. It helps ensure you have access to high quality care without depleting your life savings. The younger and healthier you are when you buy a policy, the lower your premiums will typically be.
Types of Long Term Care Insurance
The two most common types of long term care insurance are traditional and hybrid policies. Traditional policies cover only long term care costs. Hybrid policies provide life insurance coverage plus long term care benefits. If you don’t use the long term care benefits, your family receives a life insurance payout. Hybrid policies often have higher premiums but provide more flexibility.
Some policies also allow you to choose specific coverage options like:
- Nursing home care only or comprehensive coverage including assisted living and in-home care. Comprehensive coverage provides more flexibility but higher premiums.
- Fixed period of coverage (e.g. 3 years) or lifetime coverage. Lifetime coverage offers more security but significantly higher premiums.
- Inflation protection to help ensure your coverage keeps up with increasing costs. Lack of inflation protection means your policy may not cover a significant portion of costs in the future.
- Optional riders for things like caregiver respite care or coverage for conditions like Alzheimer’s. Riders increase premiums but expand coverage.
The options can be complex, so it’s best to discuss your needs and budget with an insurance agent to find the right policy for you. While long term care insurance costs vary based on your options and benefits, one thing is clear: the sooner you start planning, the more affordable quality care will be.
How to Choose the Best Long Term Care Insurance Company
There are a few key things to consider when comparing long term care insurance companies. The company you choose can have a big impact on your coverage, premiums, and overall experience.
Financial stability
You want a company that will be around for decades to come to pay out your claims. Check independent ratings of the company’s financial strength from rating agencies like A.M. Best or Standard & Poor’s. Look for ratings of “A” or better. Some of the largest, most stable companies include Northwestern Mutual, New York Life, and Mutual of Omaha.
Premium rates
Premiums can vary significantly between companies for the exact same coverage. Get quotes from multiple companies for the specific coverage you need. Consider the initial premium as well as potential rate increases over time. Some companies are known for raising rates more aggressively than others. Mutual companies like New York Life and Northwestern Mutual typically have lower rates of increase.
Coverage options
The best companies offer flexibility in coverage with options for home health care, assisted living, and nursing home care. They also provide inflation protection to increase your benefit amounts over time. Look for companies that provide comprehensive coverage with few restrictions or limitations. For example, avoid those with narrow networks, caps on coverage, or limits on pre-existing conditions.
Customer satisfaction
Check online reviews from independent sources like J.D. Power, Consumer Reports, and your state’s insurance commissioner website. Look for companies with high satisfaction scores, few complaints, and a reputation for fair claims handling. Some highly-rated companies for customer satisfaction include Mutual of Omaha, New York Life, and TIAA. Choosing a reputable, customer-focused company can mean the difference between having a policy you can count on or one filled with unexpected costs and coverage gaps when you need it most. Do your research and don’t hesitate to ask companies lots of questions. The time you put in now will give you peace of mind for the long run.
The 5 Worst Long Term Care Insurance Companies
Penn Treaty Network America
Penn Treaty Network America filed for bankruptcy in 2017, leaving over 70,000 policyholders in limbo. Many were forced to find new coverage or lose benefits they had paid for years. Penn Treaty was plagued by overly optimistic projections of costs, interest rates and lapse rates. They ultimately couldn’t pay claims and went belly up.
Conseco Senior Health Insurance Company
Conseco Senior Health Insurance Company has a history of large rate hikes, sometimes over 200% on long-term care policies. They’ve left many seniors unable to afford the coverage they purchased for their retirement. Conseco has also gone through restructuring, taking on new names like Washington National Insurance Company. But policyholders report the same issues under new management.
American Network Insurance Company
American Network Insurance Company, now owned by Global Bankers Insurance Group, has a record of not paying claims when policyholders file for benefits. They deny claims for arbitrary reasons and drag the appeals process on endlessly. Many policyholders pursue legal action just to get the coverage they paid for.
Penncorp Life Insurance Company
Like Penn Treaty, Penncorp Life Insurance Company went bankrupt, leaving over 40,000 policyholders without coverage. Penncorp couldn’t keep up with costs and interest rates, and their business model ultimately collapsed. Policyholders lost benefits they had paid for and relied upon for their financial security.
Allianz Life Insurance Company of North America
Allianz Life Insurance Company of North America frequently and substantially raises rates on long-term care insurance policies. Some policyholders report rate hikes of 200-500% or more over a few short years. Allianz claims they need to increase rates to remain solvent, but many feel they miscalculated costs and are passing the burden onto policyholders. Some lose their policies altogether due to unaffordable rate hikes.
In summary, the worst long-term care insurance companies tend to aggressively raise rates, deny claims, go bankrupt leaving policyholders without coverage, or use questionable business practices. Do your research before purchasing a policy to avoid becoming their next victim.
Avoid These Red Flags When Shopping for Coverage
When evaluating long term care insurance companies, watch out for these troubling signs that could signal a poor customer experience down the road.
Excessive Rate Increases
Some companies are notorious for hiking premium rates by 50-100% after a few years. This practice, called “bait and switch,” lures you in with an affordable initial rate, then jacks
it up exponentially once you’re locked in. Ask about the company’s history of rate increases, and buy from a company with single-digit increases.
A History of Denying Claims
A company that denies a high percentage of claims may leave you high and dry when you need coverage the most. Do some research on third-party rating sites to see how the companies you’re considering rank in terms of claims processing and customer satisfaction. Look for companies with a proven track record of ethical behavior and a commitment to delivering promised benefits.
Limited Policy Options
The long term care insurance market has evolved, and the best companies offer flexible benefits and a range of coverage options. Look for a company that provides comprehensive coverage, benefits for home care and assisted living in addition to nursing home care, and optional riders you can add on for an additional premium. Limited, inflexible options are a sign of an outdated, less consumer-friendly company.
Poor Financial Stability
When buying insurance, the company’s financial strength matters greatly. If a company closes its doors, your policy could become worthless. Only consider companies that have earned an “A” rating or better from independent financial rating agencies like Standard & Poor’s, Moody’s, or A.M. Best. These ratings measure factors like cash reserves, debt levels, and ability to pay out claims.
By avoiding companies with these red flags, you can feel confident you’re buying a solid long term care insurance policy that will provide the coverage you need for years to come. Do your homework and choose wisely – your financial security later in life may depend on
it.
Conclusion
So there you have it, friends. The bottom 5 long term care insurance companies that you’ll want to steer clear of if you’re shopping around. Don’t let yourself get duped into signing up with one of these shady operators. You deserve better. Do your homework, ask the
right questions, and find a policy that will be there when you need it most. Your future self
will thank you. Stay savvy out there!
FAQs: Answering Common Questions About the Worst Long Term Care Insurance Companies
What companies should I avoid for long term care insurance?
Some of the most notoriously unreliable long term care insurance companies are Genworth, Penn Treaty, and Conseco. These companies have a history of denied claims, rate hikes, and some have even gone bankrupt, leaving policyholders with worthless policies. It’s best to steer clear of these companies altogether if you’re looking for long term care insurance.
Why are rate hikes so common with long term care insurance companies?
Long term care insurance companies often underestimate how much long term care will cost in the coming decades and have to raise rates to account for their miscalculations. Some of the companies with the biggest rate hikes, like Genworth, relied too heavily on investments to fund policies and were hit hard by market downturns. Rate hikes mean higher premiums for you and a higher chance of your policy lapsing if you can’t afford the increases.
What happens if my long term care insurance company goes bankrupt?
If an insurance company goes bankrupt, there is a chance you could lose the coverage you’ve been paying for. Some state life and health insurance guaranty associations provide limited coverage in the event of bankruptcy, but there is no guarantee. The safest option is to choose a company with a solid financial rating so you avoid this scenario altogether. Check ratings from A.M. Best, Moody’s, and Standard & Poor’s to determine a company’s financial stability before purchasing a policy.
Should I consider a newer company for my policy?
Newer companies may seem appealing with lower premiums, but they also tend to be riskier since they haven’t been tested by years of paying out claims. Established, highly- rated companies with decades of experience tend to be safer options, even if their premiums are slightly higher. The most important thing is that the company is financially stable and able to pay out claims for the lifetime of your policy.
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