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The dreaded LTCI premium increase notice

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When you meet with your long-term care insurance (LTCI) policy owners, you can be a source of great stress relief if you take the time to explain that the inevitable policy premium increase that they have heard so much about may not be as bad as anticipated.

The fact is that LTCI carriers are bending over backwards to help the policy owner understand the needs for the increases and are trying to keep the increases as low as possible.

I was recently involved in a series of policy reviews for a client. One of the policies was a long-term care contract issued by a major carrier. She had not experienced any increases in premium, but I had told her long ago that she should expect them at some time in the future.

See also: Regulators draft LTCI rating manual update

Sure enough, in our review, she pulled out a letter from the carrier that said “IMPORTANT NOTICE” on the envelope. With noticeable anxiety in her voice, she said, “I don’t know how I’m going to afford this.” She said that she had circled the words “57 percent increase” but, hadn’t read past that point in the letter because it upset her so. She added, “I’m retired now and I’m living on a fixed income.”

I told her that a 57 percent increase might seem like a lot, but that we should read the entire letter together. In doing so, we found the accommodations that the insurance company had outlined for her consideration in dealing with the increase. Ignoring all of the rest of the letter, I told her that with a check mark in a box, she could take care of the whole matter without raising her premium at all. The option to keep the policy at the same premium was to have the 5 percent benefit increase rider (BIR) reduced to 3.8 percent.

See also: 20 ways to impress LTC planning prospects

While she was pondering that, I pointed out that the insurance company’s notice indicated that her maximum daily benefit (MDB) had increased to $222 over the years. That cheered her up a bit. I suggested that we go online to see how that compared to average care costs in her area and how much they had actually increased over time. We found that the current average cost for care per day for home care was estimated to be $198 and that facility care was about $220. The annual inflation of those costs was averaging 3.5 percent in that same region.

Her voice returned to normal and she was relieved that by agreeing to the change in the BIR, she would not be seriously compromising her insurance coverage. I assured her that if rates did go up again, it probably wouldn’t happen soon because 57 percent was quite an increase. But, if they did, they would only go up for everyone that owned the same policy series that she owned.

I have to admit that I concluded that conversation with a great sigh of relief. Not every increase in premiums is as easy to handle as that one was. Not long after this incident, my wife received notice that her LTCI premium was to be increased. So, we experienced the same concerns that my policyowner had experienced in opening her “important notice”. We were relieved to find a similar “check box” accommodation from our carrier and virtually the same comparative estimates for current and future cost data as it related to her policy.

As the sales agent, you are probably receiving steady commission trails on the LTCI policies that you sold many years ago. The traditional assumption by the carrier for those trails is that you will continue to service your clients. Pro-active, follow-up service can help conserve your book of business, provide great comfort to your policyowners, and may result in quality referrals, too.

See also: 5 ideas from a top LTCI distributor’s playbook