Don't Let Price Increases Scare You Away From Long-Term Care Coverage

Just when America was warming up to the idea of purchasing long term care insurance to protect family assets from the devastating costs of custodial care, the three largest insurance companies have shaken up the market by raising prices on existing policies, not just on policies to be sold in the future. How will this affect your planning?

Long term care insurance policies are sold with the "assumption" of level premiums that won't increase much over the years. That's the incentive to buy when you are young and healthy and prices are lower. Insurers do have the right, however, to go to state insurance commissioners and ask them to approve price increases for specific policies if the claims significantly exceed their original expectations.

When insurers first created long term care policies, it was hard to predict their costs. But insurers gained valuable experience offering benefits and pricing policies on long term care insurance in the past 10 years, and that created the expectation that the risk of price increases on the more recently issued policies would be slim, and that any premium increases would be minimal. ...