What happens if my LTC Insurance company goes out of business?
If you purchase long-term care insurance (LTCI) from an insurance carrier, and they go out of business or stop selling that particular product, is your policy still valid? Yes, absolutely, you are not going to lose your LTCI policy. LTCI is a protected contract by your state’s guarantee association and part of a national safety net (National Organization of Life and Health Insurance Guaranty Associations). It is very similar to how your bank accounts are FDIC insured, even if your bank goes out of business.
Why do LTCI carriers leave the market?
In terms of insurance products LTCI is still considered fairly new. When companies created the products, many priced them too low and assumed more people would let the product lapse. However, consumers realized how important LTCI was, and they held onto it even through rate increases. When it came time to pay claims, some insurance companies realized they could be in trouble, and decided to stop selling new policies. Claims were still covered, and existing policies will still be valid, but the insurance companies realized they weren’t going to be able to make up the difference.
It is important to note that there are still a good number of reliable and affordable LTCI carriers and products available in today’s market. These insurance carriers learned their lessons earlier, had more assets to cover mistakes, and have evolved with their newer products. LTCI options today vary greatly and provide coverage for almost every budget and need.
"LTC Consumer only works with the top insurance carriers with the highest available ratings."
Do I have to keep paying my premiums?
If you want your policy to remain active, then you have to keep paying your premiums. Your premiums will go to the insurance company who purchases the block of business, or to the guaranty association providing your continued coverage. If you stop paying your premiums, then your policy will lapse and you will lose all coverage. If you purchased a product with a limited-pay option, and you have completed those payments, then your policy is paid up and you won’t have to pay additional premiums.
Will I still be able to go on claim?
Each state’s guarantee association has made sure that consumers will be able to go on claim if necessary. You will have to meet all of the same requirements as the policy originally spelled out. They set their own claim limits, but most are at $300,000 for LTCI. Contact your state’s guaranty association to check specific coverage. We checked for Oregon, and it was at the $300,000.
"LTCI options today vary greatly and provide coverage for almost every budget and need."
How working with LTC Consumer can help
The LTC Consumer team of specialists are brokerage, meaning they aren’t tied to one carrier. They will assess your needs and your budget and work with you to find an insurance carrier and an LTC product you are comfortable with. LTC Consumer only works with the top insurance carriers with the highest available ratings. Get a quote today and find out if LTCI should be a part of your retirement plan.