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Nov 15, 2023 • Laura Dantuono

What should you recommend to a client who received a LTC rate increase



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The holidays are approaching, and families are gathering together. While it’s all about food, drinks, games and fun there may be an opportunity to discuss the need for Long-Term Care Insurance with parents, family and friends. One of the most frequent questions people bring up in the LTC conversation is “What if the insurance company raises my premium?”

Unfortunately, for someone with an older policy the likelihood of a rate increase is still a possibility. The economy is uncertain and can be challenging for both the consumer and the insurance industry. Years ago, when Long-Term Care was a new product in the insurance world it was priced based on assumptions that were just not accurate. Utilization of the product was unclear and lapse rates were projected to be much higher than they were. As a result, policyholders with very low premiums and rich LTC benefits are now getting hit with large rate increases.

As an example, a policy with a lifetime benefit period and 5% compound inflation is most likely experiencing a fairy large rate increase. I look at these policies daily. Policyholders need to remember that they have a very rich Long-Term Care policy that will cover a nursing home or assisted living claim that could otherwise deplete their assets quickly. Unless a policyholder is in an unfortunate financial situation and cannot pay any additional premium, they should in most cases pay the additional premium being asked. Relative to the benefits in their policy even their increased premium is still a good value.

I just spoke with a couple who are experiencing some large premium increases on their LTC policy however her mom’s policy is paying out right now and basically saving her financial situation. While so many factors are uncertain in the insurance world, such as utilization and interest rates, the importance of Long-Term Care Insurance as a protection vehicle for what could be a huge potential liability is a constant and should be considered a top financial priority.

The good news is for the new purchasers of LTC Insurance the odds of future rate increases are much lower than in the past. That's because today's products are priced with much more conservative actuarial assumptions. And clients also choose products that have guaranteed premiums. They are a little more expensive but can provide peace of mind. 

In-Force Policy Review


Written by Laura Dantuono