Long-term care insurance (LTCI) policyholders who can afford to pay higher premiums should probably take a deep breath when the premiums go up and keep their current LTCI coverage in place.
LTCI policyholders who can’t afford to pay the increased premiums should try to keep as much of the coverage in place as possible, by accepting one of the premium increase alternatives the issuer offers, or by calling up and ask if the insurer will consider allowing some other arrangement.
Jesse Slome, the director of the American Association for Long-Term Care Insurance (AALTCI), gives that advice in a new commentary.
(Related: Agents Optimistic About LTCI Sales: AALTCI)
Slome says rates are going up because providing the coverage has turned out to be much more expensive than the issuers had expected.
Many of the consumers facing the biggest increases bought their policies many years ago, and those consumers are nearing the age when the risk of needing long-term care services is increasing rapidly, Slome says.
For a 75-year-old couple seeking a policy with a 5-year benefit period, a $5,000 monthly benefit, and 5% compound inflation protection, the annual cost could be about $20,500 per year, Slome says.
Even with a big increase, the monthly premium for an old policy might be much lower the premium for the new policy, Slome says.
“Very often long-term care insurance policies subjected to rate increases contain provisions that are no longer even offered,” Slome says. “For example, most insurers today don’t offer lifetime or unlimited benefit policies, and few people would pay the cost of a 5% inflation growth option.”
Another problem is that many LTCI policyholders in their 70s are no longer healthy enough to have an easy time buying LTCI coverage, Slome adds.
For policyholders who would find paying the higher premiums a hardship, two options to consider are cutting the benefit period and cutting the inflation protection level, Slome says.
— Read AALTCI Sees Big Variations in 2019 LTCI Premiums, on ThinkAdvisor.