Long term care insurance doesn’t come cheap, and it also tends to be more complex than other types of insurance. When purchasing long term care insurance, one of the several things you should consider is the rating of the insurance company – although most of us don’t pay much attention to it.

The ratings system was basically designed to ensure that the insurance company issuing a policy is financially sound. There are several different independent companies that offer ratings systems including such familiar names as Standard and Poors and Moody’s.

Perhaps the most well known of the ratings companies is A.M. Best which publishes over 50 different reports about insurance companies and the industry in general. The company has been in business over 100 years, and is the largest such company in the world.

Technically the credit ratings evaluate the risk potential and the creditworthiness of a particular company – they aren’t really meant to be an endorsement, although inevitably people use them as such.

The ratings companies all have slightly different designations, but the grades are easy enough to understand. The ratings scores all work in much the same way as your child’s school grades using a scale from A to F - A and B are good, whereas a C, D or E rating is not so good.

Best’s highest rating is A+, whereas Standard and Poor’s best rating is AAA and Moody’s is Aaa. These ratings all mean more or less the same thing – an excellent track record, financial stability and the ability to meet the demands and expectations of policyholders.

In the somewhat unpredictable world of insurance, nothing can ever be guaranteed, but if you take out long term insurance with a company that has the highest ratings with any of the ratings companies, you have basically nothing to worry about.

As far as low ratings are concerned, you should probably avoid taking out long term care insurance with a company rated C or D. And Best’s lowest rating is an F which means the insurance company is basically bankrupt – definitely one to avoid!