Long Term Care Insurance Rate Increase Reporting Distorted

February 21, 2014 -   Consumers considering the purchase of long term care insurance for themselves or their spouse now mistakenly believe their cost will increase on a regular, sometimes yearly basis cites Jesse Slome, director of the American Association for Long Term Care Insurance (AALTCI).

According to an informal survey just conducted by the Association’s Consumer Information Call Center, concern about future rate increases is one of the more frequent concerns among those considering insurance coverage.

“It’s understandable and unfortunate because little is being done to address the mistaken perception that increases on policies written years ago mean new policies will be treated similarly,” admits Slome.   “And, then you have those who advocate for a national government long term care program misfeeding incorrect information which only throws fuel on the fire of confusion.”

Slome referenced a recent article posted on the Forbes website that could easily mislead readers into thinking all newly written long term care insurance policies will face a two-to-five percent yearly increase in costs.  “This is blatantly not true and a quote used to mislead,” Slome explains, “but a consumer reading this could understandably think it’s likely to happen to them.”

According to the Association, premiums for long term care insurance are designed to be ‘level’.   “The price is based on your age when you apply and set,” he notes.  “If an insurer wants to charge more in future years they must seek approval from the State Departments of Insurance and provide a substantive demonstration of why a rate increase is needed.  Something significant must have changed that impacts their future ability to pay claims.”

“The past does not equal the present or the future,” Slome notes.  He cites that rate increases on individual policies written years ago had the greatest impact on options that raised benefit amounts by five percent annually.  “Insurers did not anticipate the sustained low interest rate environment but today’s new policies are priced with that already factored in, so that concern shouldn’t remain.  People were given the option to continue paying the same amount but their future benefits would now start growing at say three percent.”

Slome hopes to undertake some further consumer awareness efforts to help address the concern of consumers.   “This is a complex topic and if people are concerned we owe it to them to address concerns in a straightforward and honest approach,” Slome concluded.

Individuals with questions regarding long term care insurance or seeking cost comparisons can call the American Association for Long Term Care Insurance at (818) 597-3227 or visit the Association’s website at www.aaltci.org.

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