No. of Recommendations: 2
I read recently of some insurance company that was asking for big rate hikes to existing policy holders. This was because the insurer had underestimated its costs and was losing money on the policies.

This particular insurer had apparently been buying market share by underpricing policies. The poor policy holders are now too old to switch companies and get a decent rate.

The moral to the story is that shopping for the absolute best current price may not be such a good idea. One of the reasons for starting LTC insurance early is to have affordable premiums as you become older.

The article I read (sorry, no URL, it was print WSJ or NY Times on the web and both are pay to research) said that one of the problems was lack of general underwriting experience. State insurance boards would just take the companies numbers as gospel.

Technology is a real wild card here as well. Will medical advances make you less likely to need LTC? Or will it make it more likely that you live long enough to need it?

LTC insurance is a way for us to lay off these risks on a nice, rich insurer. But if the insurer can weasel out of its obligations or doesn't have the resources to fulfill them, then you have wasted your premiums.

Errold Moody at has a lot to say about LTC. One of his points is that you should only buy from someone who has been in the LTC business for a while. Someone with some underwriting experience is more likely to set realistic and maintainable rates.

My one gripe with Errold is that he never seems to get around to a name names, Consumers Union style, rating of insurance policies. Speaking of which, IIRC CU has rated LTC policies in recent memory.

So, as in most things, I can't say if your particular policy is a good idea or not. But being half of the other qoutes could be a potential red flag. Especially if the insurer is not otherwise known as an inexpensive insurer.

I have no knowledge about the relative merits of insurers. Are there any companies in the insurance business with an approach similar to Vanguard in the mutual fund business? So many insurers are mutuals that are supposed to run for the benefit of the policy holders but instead seem to be run for the managers and agents.

Baanista - Confusing issues for as long as anyone can remember.
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