The Advisor's View of Long-Term Care Planning

How one advisor survived a LTC rate increase - their own!

Posted by Patrick Bradley | Jan 8, 2015 5:00:00 PM

Real Life LTCI Stories - How I survived a rate increase  

Image source: Flickr user OTA Photos
 

I purchased my long-term care insurance policy nine years ago, and until last fall my rates had stayed the same. That changed in October when I received notice that my premiums were going to be increasing by 80%! I did not like the sound of that, but I knew it was a good reason to review my coverage, something I had not done in nine years. My policy was in a fire-proof box at the bottom of a file cabinet in my basement. Like many people, I put the policy away after I bought it and then forgot all about it. I knew I had coverage, but I had not kept up with the benefit details.                                                     

Upon review I was reminded that I had purchased strong monthly benefits, a four year plan and a 30 day elimination period. I didn’t want the 80% increase, so I had to decide what I wanted to change. I have been asked this same question from advisors and clients many times, so it was up to me to follow my own advice. Number one, reduce the plan to three years. Even with the reduction I would still have a benefit pool of close to $500,000. Second, increase the elimination period to 90 days, I could handle the higher deductible.  My next job was to call the carrier and have a discussion about how these changes would affect my premiums. I called the 800 number that was provided in the rate increase letter and spoke to a knowledgeable, friendly representative. I was impressed that she was thinking along the same lines as I was, as she never mentioned reducing my inflation option or monthly benefit. She gave me figures for each change individually, and then both of them together. I chose to make both changes, and as a result, my 80% increase was reduced to a 12% increase. After nine years, a 12% increase was very acceptable to me. I completed the change form and a month later I received my revised schedule page.

Just for fun (insurance fun) I ran new LTC proposal to see if I could save money by purchasing a new plan and replacing my current plan.  Of course, you can't find a current policy with new premium rates that can come close to older policies because of new pricing.

When I look at my benefits now, and my new premiums, I really appreciate the value of my policy.

 

Here's some tips for handling a  client's in-force rate increase  

Topics: Advice articles about planning

Written by Patrick Bradley

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