How To Cope With Dramatically Rising Long-Term Care Insurance Premiums

Given the rising cost of long-term care, it makes sense that long-term care insurance would become more expensive. What is shocking, however, is just how dramatically the premiums for such insurance policies are rising. According to a recent article in the New York Times, some increases are as high as 40%-60%. Many companies are getting out of the long-term care insurance business altogether, having suffered significant losses on policies issued more than ten years ago. The companies that remain are increasing premiums to offset losses in the past.

So, if you have a policy and the premiums have increased, should you keep it? Here are some questions to ask yourself.

If I cancel my policy, will I be able to find cheaper one?
If you’ve had the policy for more than a couple of years, probably not. You might also find it more difficult to qualify for a new policy.

Should I pay the higher premium or choose to reduce the policy’s benefits?
The New York Times article recommends that if the increase was less than 20%, you may want to pay the increased premium and keep the benefits the same. If the increase is greater than 20%, it might be a good idea to reduce the daily benefit amount.

Are there some other ways to lower my premium besides reducing benefits?
It might be possible to lower your premium by agreeing to a lower rate of protection against inflation. However, do not agree to have any lack of inflation protection be applied retroactively, as this would significantly reduce your benefit in the long run.

Of course, every situation is unique. If you have purchased long-term care insurance and are concerned about rising premiums, we can help you decide whether it’s in your best interest to keep the policy or make changes to it. We can also help you decide whether you should purchase such a policy at all if you have not done so already. Contact us today at (626) 696-3145 to discuss your particular situation.

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