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Community Work & Retirement
04-22-2017 07:49 PM
"Therefore, life insurance, both cash value and term, has dropped in price. But disability, healthcare, and LTC, have increased in price."
Yes, LTCi premiums are skyrocketing but so are Life Insurance premiums. Recent record low interest rates and similar predictions in the foreseeable future have reduce insurance company returns and they can no longer afford to keep their policies in effect without large premium increases or reductions in death benefits.
Sorry, I have no sympathy for insurance companies that issue CONTRACTS and then welch out on them.
04-22-2017 06:45 PM
Insurance is priced according to estimated risk vs net profit (yes, you do want your carrier to be profitable. All those nice customer service people and actuaries deserve to be paid for their work). Consumers need to understand the difference between morbidity and mortality. The relatively quick lengthening of lifespan over the last four decades means that insurance policies that cover sickness/disability have higher risk for insurers, while policies that simply cover mortality now have lower risk.
Therefore, life insurance, both cash value and term, has dropped in price. But disability, healthcare, and LTC, have increased in price.
LTCi pricing was based on a set of risk vs profit assumptions, distilled from hard numbers (mortality, average age of policyholders, etc.) Those stats reflected a certain paradigm: families took care of their elderly parents, keeping them at home (or traveling back/forth to care for them), only putting them into nursing homes near the end of life. Thus, the common claim that "the average stay in a nursing home is only three years."
This is true. About 1/3 of all people aged 65 will never need to enter a nursing home. The problem is that 20% of that 65+ group will need more than five years of what's now called "skilled care nursing" (stats from Kiplinger's 2009 "How to Minimize Long Term Care Premiums").
When we bought LTCi policies in 1999, I told my DH the carriers were using pricing based on WWII seniors. "We need to be prepared for premium increases. These policies are underpriced. Healthcare costs are rising over 5% annually, with no end in sight."
The LTCi policies are from an independent carrier but our state pension fund acts as ombudsman and advocate for the policyholders. We have had four premium increases over the years, the last a very hefty one. We have "Rolls Royce" plans and the insurer would love for us to drop them, which we will not do. We fortunately have sufficient assets to carry what are now annual premiums almost 4x the original amount.
Is it still worth it? Oh, yes. With inflation protection each one of our policies pays over $90K/yr, tax-free - an amount that will continue to rise. We lucked out during the long period of low interest rates, where senior facility costs only went up 2-3%/annually but our policies continued to automatically rise 5%/yr.
No insurer now offers the kind of plan we have. But since our morbidity is high risk, we know it protects our assets from being drained by the disability of one spouse, to the financial detriment of the other.
These days, they sell "hybrid policies" - annuities or life policies with an LTC rider. These are complex financial instruments and ALWAYS should be reviewed with a financial consultant who has expertise with LTC policies. Never, ever, get rushed into buying one of these! I'm not saying they are all bad, but they are relatively new to the market and you want it priced to your advantage, not the insurer's.
There are brokers who specialize in LTCi, and work with a variety of carriers. A good broker stays with companies with good reputations and financial stability. You can also (and should) check your State Dept. of Insurance to see if they publish complaint statistics on-line; many of them do. The fewer complaints, the better; especially when it comes to the topic of customer service.
02-09-2017 11:16 AM - edited 02-09-2017 11:18 AM
Yep, same thing happened with mine - UNUM LTC. Started at $75 a month 15 years ago for 5 years coverage with a 5% annual inflation rider. 5 years later they put it up to $100 a month, then $125 a month,and then last year the tripled it to $268 a month (all approved by the NC insurance commission). They offered to leave it at $125 a month if we dropped the inflation coverage to 3% a year which, of course, we did. However, by the time we need the insurance (if we ever do) it will only cover 1/2 our expenses.
02-09-2017 11:04 AM
I retired in 1990. My long term care ins, was touted to be something I should purchase prior to that time as price was bases on my age--it was SUPPOSED to be for my lifetime,
About 4 years later I was advised the premium would be going up despite my understanding that the could not increase this---Low + behhold: they could not increase an individual's premium but could increase premiums for a "class."
They next advised that my lifetime coverage was now for only 3 years unless I wanted to have much higer costs!!! As I could NOT afford to pay more on my retired income, I had better never last more than the 3 years & pray there will be no further ADJUSTMENTS!
I feel that had they stuck with what I initially purchased, I would not be now at risk. I was employed by San Bernardo County. My retirement monthly is $473.08. For insuring my present 3 years of long term care is $146.75 monthly. Were it not for my husband's retirement I could not afford this amount.
I was trying to be responsible but instead feel duped.
02-09-2017 08:04 AM - edited 02-09-2017 08:06 AM
Oops .. posted to wrong discussion!
Registered on Online Community since 2007!
02-08-2017 09:56 PM
Most of those policies are written so that, by the time you need it, inflation has caused the dollar benefits to be next to useless. I've seen it happen several times. There are benefit limits that are consumed by inflation.
02-08-2017 08:47 PM
Please fee free to review this entensive library of long term care insurance research:
02-08-2017 08:00 PM
And please share what you find out here! Then we can turnkey train others and get the message out on any worthwhile plans. Thanks for doing this research.
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