Handling Long Term Care Insurance Rate Increases

Los Angeles; April 22, 2013 – A growing number of individuals who purchased long-term care insurance in the 1990s and early 2000s have been receiving notifications of premium increases.  They have options worth understanding explains one of the nation’s leading experts.

“While notification that your rate will increase is never welcome news, headlines often misstate and sensationalize the matter, creating confusion among consumers,” declares Jesse Slome, executive Director of the American Association for Long-Term Care Insurance.   The expert was citing recent flurry of headlines citing an 85 percent rate increase for California retirees who purchased long term care insurance through the State’s benefit offering.

“Only certain policies are impacted and some policyholders could actually pay less, which is something you never hear about,” Slome shared this past weekend with California-based insurance professionals as part of his regular long term care insurance industry update.  “Typically, those people who purchased policies with automatic, annual five percent increase in yearly benefits and those who have lifetime or unlimited policies are impacted by rate increases.”  He noted that the low-interest rate environment has forced many insurers to seek rate increases.

“Insurers invest the premiums paid by policyholders to accumulate the dollars needed to pay future claims,” the long term care insurance expert told the group.  “How can you increase benefits by five percent yearly when you are only able to earn one or two percent?  You can’t so you are forced to raise premiums or give the policyholder the option of changing their policy provisions.”

Policyholders are offered more choices than just ‘pay the new premium’ Slome explained.  Options include changing the daily benefit maximum, converting a lifetime or unlimited policy into one that offers benefits for a specific time period or accepting a different inflation growth option.  “The company will typically maintain the value your policy has grown to but reduce future growth from say five percent yearly to three or three-and-a-half percent for future growth.”

Rate increases typically affect policyholders who have had coverage in place for a number of years.  “The same coverage today would be far more expensive even after the rate increase and that assumes the individual can still health qualify,” Slome shared with the group.  “When consumers call the Association office we explain if they have had their policy for more than two years, equal coverage will cost them more.”

Newer policies, those being marketed today, are less prone to future rate increases, Slome forecasts to the group.  “First, interest rates are at historic lows and likely to increase removing that problem and second, new regulations are in place that offer consumers today added protection from future rate increases,” Slome concluded.

For long term care insurance costs connect with a designated specialist member of the American Association for Long-Term Care Insurance by visiting the organization’s website or call 818-597-3227.

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