Intro
When you’re looking at long-term care insurance (LTCi) policies, it’s smart to check out the insurer’s rating. After all, you want them to be there for you twenty years from now when you need the benefits. Luckily, there are people in tall buildings analyzing endless spreadsheets so you don’t have to.
That said, we only review and sell LTCi from the most reliable insurers. If one insurer’s rating is just a bit different from another, it’s likely not a huge deal—they’ll both be around when it counts.
Ratings
Rating agency definitions
Each rating agency uses its own scale, with unique definitions for each rating level. Here’s a breakdown of how they define their ratings.
AM Best
- A++ and A+: "Superior" – Indicating a superior ability to meet ongoing insurance obligations.
- A and A-: "Excellent" – Reflecting an excellent ability to meet ongoing insurance obligations.
- B++ and B+: "Good" – Demonstrating a good ability to meet ongoing insurance obligations, although with greater susceptibility to adverse changes in economic or underwriting conditions.
S&P (Standard & Poor's)
- AAA: "Extremely Strong" – The obligor has an extremely strong capacity to meet its financial commitments.
- AA+, AA, AA-: "Very Strong" – The obligor has a very strong capacity to meet its financial commitments.
- A+, A, A-: "Strong" – The obligor has a strong capacity to meet its financial commitments but is somewhat more susceptible to adverse economic conditions.
Moody's
- Aaa: Obligations rated Aaa are of the highest quality and are subject to the lowest level of credit risk.
- Aa: Obligations rated Aa are of high quality and are subject to very low credit risk.
- A: Obligations rated A are upper-medium grade and are subject to low credit risk.
Fitch
- AAA: "Highest credit quality" – AAA' ratings denote the lowest expectation of default risk. They are assigned only in cases of exceptionally strong capacity for payment of financial commitments.
- AA+, AA, AA-: "Very high credit quality" – 'AA' ratings denote expectations of very low default risk. They indicate very strong capacity for payment of financial commitments.
- A+, A, A-: "High credit quality" – 'A' ratings denote expectations of low default risk. The capacity for payment of financial commitments is considered strong.
COMDEX score
The COMDEX score is a composite score that ranks insurance companies based on their ratings from the major rating agencies. Rather than issuing its own rating, the COMDEX score aggregates the ratings from these agencies into a single, easily comparable number from 1-100.
For instance, an insurer with top-tier ratings from AM Best, S&P, and Moody's could have a COMDEX score of 96.
Wrap up
So, while the people in tall buildings crunch numbers to give you these ratings, remember they’re just one piece of the puzzle when choosing your LTCi policy—but a helpful one.
