In April 2007, Senators Barack Obama and Hillary Clinton
requested that our Government Accountability Office examine
the long term care insurance industry's track-record for
claims, premium increases and those increases' relation to
LTCi policy lapses. Will they find dirt under the rug?
Well, I'll give you the answer!
If you look at the long term care insurance industry's
claims pay-outs, you'd be encouraged. Claim denials are
extremely low compared to other types of insurance - and
LTCi companies pay a LOT of claims" - $3.3 billion in 2006
alone. The largest claim as of Dec. 2006 was over
$875,000!!! (Can you imagine paying that out of your
pocket?) So, kudos for long term care insurance.
However, there are some LTCi companies that have given the
entire industry a bad name, as well as giving consumers
reason to pause. Companies that have sold inexpensive
policies with lots of bells and whistles have felt the need
to either sell off their long term care insurance business,
ask for rate increases on existing policy holders or even
deny or delay claims. "Low-balling" on what should have
been "expensive" policies was definitely poor planning by
those companies Some folks might even look at it as some
type of fraud.
Some of the same companies had slack underwriting and would
accept people who were higher risk, health-wise. This
business strategy was a disaster waiting to happen.
Another issue has been one of rate increases. Some
companies have increased rates on their policies,
especially policies with unlimited lifetime benefits.
Since a company has to put aside a million dollars for
every unlimited lifetime policy, and since the price of
long term care itself is inflating at over 6% per year,
most companies who charged reasonable rates for these
policies have had to ask for rate increases.
It seems that the LTCi players that are left on the field
are being very careful these days. Long term care
insurance now has enough "claimshistory" that actuaries can
figure out what companies truly need to charge for each
product. Most companies have tightened up their
underwriting and some are not selling unlimited lifetime
policies any longer. The ones that do charge hefty premiums.
All these factors are helping to strengthen and revivify
the LTCi industry and to promote trust within consumers.
Let's hope that this trust is warranted and that these
improved policies will not suffer from rate increases in
the future!
There's no doubt in my mind that any investigation into the
LTCi industry will turn up some companies that had less
than desirable claims pay-out and rate increase records in
the past. Even so, I think that an investigation will find
that the LTCi industry as a whole is one of the best in the
insurance arena for paying claims. As far as raising
premium rates goes, since LTCi companies cannot increase
rates unless approved by a state's Dept of Insurance,
perhaps states' DOI should not grant as many rate increases?
... Just a thought!
About the Author:
Long term care insurance activist, CB Cotton, and his wife,
Kimberly, write for http://www.PrepSmar
Baby Boomers Decision Assistance Center, where you get Free
Long Term Care Insurance advice, comparative rate quotes
and personal guidance, all while safely at home in your
favorite pajamas and bunny slippers.
Friday, June 22, 2007
Obama, Clinton Spotlight Long Term Care Insurance Industry
Term Life Insurance For Newlyweds
These days getting married brings about the joining of couples
of many different circumstances. Of course there is the
ever-traditional young couple fresh out of college who might
have no other financial obligations other than student loans,
rent and their vehicles. There are usually no children involved
and life is just full of possibilities and opportunities that
will be built together. Assets as well as bills will be
accumulated as a couple.
On the other hand, there are now many couples who are
remarrying for the second or third time and this is where
things get more complicated. As newlyweds who are marrying for
the second or third time are usually older, there is not only a
blending of many collected assets and bills but more than likely
a blending of children from both the husband and wife. There may
even be dependents such as elderly parents who are being taken
care of by either spouse.
In either scenario, starting a new life with someone not only
brings on many emotional and personal changes but also a whole
new spectrum of financial responsibilities. These new
obligations, especially when children are involved, beckon for
financial security if the unspeakable should happen – the loss
of either spouse.
While no one likes to think about familial loss, especially
when your new life together has just begun, it is important to
plan ahead. Term life insurance is the most cost efficient way
to plan for unpredictable loss. For young couples just starting
out, term life is an inexpensive way to gain financial
protection. Even if insurance seems unnecessary for a young
couple where both partners are both working and there are no
real financial obligations, it is actually the best time to buy
since term life insurance is cheapest for the youth.
For those couples blending finances and children, purchasing a
term life insurance plan is a "quick fix" until the whole new
family situation can be assessed more thoroughly. As your true
needs reveal themselves, you can change your plan accordingly.
It is therefore important to make sure the policy you buy is
convertible. If you already have existing life insurance, make
sure you change the names of beneficiaries accordingly.
Some Tips for Newlyweds
For couples planning on having children it would be ideal to
buy a term life policy that will keep your family covered until
the children graduate from college. For the longest protection
it would be advisable to purchase a 20 or 30-year level term
policy. Level term policies stay unchanged from the original
purchase price. The longer the coverage, the more costly the
premiums, however, level term is still the most inexpensive
coverage you can purchase. This is the best way for young
couples or new families to get started.
The rule of thumb for purchasing coverage is usually 10 times
your annual net income. However, the face value will obviously
vary depending on your age and number of dependents you have
now inherited or plan to have down the line. Only you can
decide what your family would need.
While it seems tempting to rush off and buy the least expensive
policy, especially as a short term alternative until your
settled family's true needs are revealed, it is important to
make sure you go with a carrier that is "A" rated. Your best
bet is to find a reputable broker who can advise you properly,
especially if buying a level term policy. You want to make sure
you buy a policy that is convertible, renewable and comes with a
guaranteed period.
Certainly buying term life insurance may not seem a very
romantic thing to think about as a newlywed, but in reality,
coverage that protects you and your spouse against life's
unforeseen events is an important part of planning your life
together. Assessing and addressing your insurance needs early
on will help get your marriage off on the right financial
footing.
About The Author: Sharon Taylor is a professional writer and
contributor for http://www.equote.
premier Internet resource for term life insurance,
no-obligation quotes, and other helpful resource information.
Please use the HTML version of this article at:
http://www.isnare.
