Long-Term Care Insurance Premiums Have Increased Dramatically Over Time
Posted in Health Insurance
September 22nd, 2009
If you’ve been considering long-term care insurance to help pay for nursing home needs later in life, you may be deterred by reports that premiums have increased dramatically over the last decade. According to a recent report from Dallas Morning News, a Dallas couple found that their policy increased significantly – more than 70 percent – since 2000, leaving them contemplating whether they would like to cancel their policy.
Long-term care insurance was designed to be relatively stable in price – and can’t increase based on age or declining health. So what could bring on an increase like this? Experts say there are a number of factors involved:
- Making the wrong assumptions - Many companies under priced their policies before 2000 assuming a large number of policyholders would terminate their coverage early.
- Inadequate research – Also, because the long-term care insurance industry was so young, companies hadn’t accumulated substantial data to calculate premiums.
- Financial crisis – The financial crisis affected all insurance premiums; long-term care insurance was no exception.
Because at least two of the above issues have been resolved, experts assume that rates will not increase at high rates again in the future. But if you are a policyholder who has had long-term care insurance for years and are disillusioned by a rate increase – you may feel the need to end your coverage. Experts advise against this. Instead, you can try scaling back benefits and reducing the benefit period from lifetime to five years to help keep your monthly premium low. Experts also advise against switching companies because your rates could increase.
Your best bet when shopping for long-term care insurance is to treat it like auto insurance and shop around. By searching for companies that are known for being financially secure, you can lower the risk of drastic premium hikes.