Advantages of Long Term Care Insurance Page 14

To prevent the sale of contracts not worth buying because of their limited benefits, regulators have developed a general measure, the loss ratio, to evaluate an insurance policy’s economic value. The loss ratio is the proportion of total premiums paid out in benefits to consumers during the year. Typically, high loss ratios are thought to be a sign of a good product. Although little is known about long- term care insurance loss ratios, some states have set loss ratio minimums in the range of 50 percent to 60 percent.

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