Long Term Care Insurance Company Ratings Fumble in April 2009 Financial Planning

by John Darer® CLU ChFC CSSC RSP

A fumble "at the goal line" in otherwise very good article on the financial security provided by long term care insurers in the April 2009 Financial Planning magazine (pp 48-53) leaves me scratching my head.

Donald Jay Korn observes that the cost of long term care insurance has been rising and questions whether the companies that offer it are still on solid ground and then misrepresents that out of the top long term insurance companies only John Hancock Life Insurance Company and Massachusetts Mutual Life Insurance Company get the highest grades from the three rating agencies. Korn lists A.M. Best Co., Moody's and Standard & Poors as "the three rating agencies".

Comments:

1. There are more than three rating agencies. Most notably Korn omitted Fitch.
2. While both John Hancock Life and Massachusetts Mutual Life  are top rated by A.M. Best and Standard & Poors they are both rated Aa1 which is a great rating but still the second tier. Moody's "highest grade" is Aaa NOT Aa1.
3. Northwestern Mutual Long Term Care Company, a wholly owned subsidiary of Northwestern Mutual Life Insurance Company, does in fact have the top ratings from the three rating agencies that Donald Jay Korn refers to as well as Fitch Ratings.