The bad news – your Long Term Care Insurance premiums CAN increase.
The good news – there are ways to modify your policy and mitigate the proposed increase.
If you (or your clients) receive a notice advising of increasing premiums, here’s what you should know:
It’s legal. Insurers are able to increase premiums, as long as they have gotten permission from the state insurance department, and as long as they increase the premiums for the entire class of insureds.
Don’t rush to cancel your policy. Premiums have risen dramatically over the years. Even with the increase, there is a high probability that you’re paying much less than you would be for a new policy.
Call your agent. Your agent can compare your policy to what’s available in today’s marketplace, and let you know how your policy stacks up. Have your agent call the insurer with you. Ask about ALL of the possible ways to modify your policy. Many times, we have seen clients receive a notice that only gives them one or two options. However, when we called, we were given additional (and usually better) choices.
A few modifications to consider are:
- extending the elimination period, which is often 90 days, to 180 or 365 days
- reducing inflation protection from 5% to 3% (or even removing it)
- shortening the benefit period
Engage your trusted advisors. Speak to your wealth advisor or estate planning attorney. They can help you reevaluate your needs. Sites like www.longtermcare.gov can help you determine long term care costs in your state. Your policy may be adequate, even with a modification. If it isn’t, your financial advisor can help you budget for an increased premium, or create a savings plan to supplement your policy.
Don’t be pessimistic. Premium increases are less common with newer policies. The fear of a higher premium should not keep you from creating a plan for long term care expenses. For the majority of people, an insurance policy is an essential part of that plan. Even if you do receive a premium increase, remember that you are still in a much more secure position than you would be without the policy.An insurance policy should not only provide the desired protection, it should also bring you peace of mind. If you do get a premium increase notice, keep your cool and engage your team of advisors to ensure a positive outcome!
Please contact me if you have any questions about Long Term Care Insurance or if you would like a complimentary review of your policy.
I can be reached at 646-801-9983 or erin@dynamainsurance.com.
