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.
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.