Insurance Policy Rate Increases

Will My Insurance Rate Increase?

All traditional long term care policies have the language that rates can go up for existing policyholders in the same State with the same policy series number but cannot go up based on one’s age or health changing.

There have been countless articles about long-term care insurance and the premium increases affecting them. Please note that often these articles leave out pertinent information related to these rate increases, but many of the older policies issues from 2010 and before (considered “legacy” policies) were underprices by actuaries and have had the need for rate increases. 

These policies were priced too low based on low interest rate assumptions, more people keeping their policies and not cancelling them (low lapse-rates) and more liberal underwriting, etc. All of these policies were sold before rate stability rules, now in place in most states.

Please watch a video that speaks to the rates increases. This video was produced by The American College of Financial Services. It will help interested clients decide what to do on their existing policies or those preparing to apply for long term care insurance for the first time.

Please note that most Long-term care insurance policies are intended to have level premiums. There are some policies where the premium does go up each year, by design, as benefits increase or you elect to purchase additional benefits. However, most policies have premiums that are intended to remain level based on your age at the time of application, your health, and the amount of coverage you selected. 

However, no one offering traditional long-term care insurance should ever state that your rates will never change. If someone does state that, it might be wise to not do business with that individual. Because carriers’ underwriting is much more data-driven and conservative than before, premium levels now consider low-interest rates, lapse rate environment, and their claims data. 

Many top long term care specialists reference The Society of Actuaries which suggests the chance of a rate increase on a long-term care policy sold today is very, very low.

Read this article:

Again, that does not mean there cannot be a rate increase on existing policyholders or those more recently issued. However, insurance companies’ intent is to try and not raise rates on the products being sold today. Policy designs today are meant to be rate stable. An insurance company must certify with your state's Department of Insurance that based on their pricing, underwriting, and actuarial data that they expect the premium to remain level.  So there is an extensive process before an insurance product is allowed to be sold, in which the insurance company has shown the state regulators that their sound actuarial data will hold up in the decades ahead. Essentially, they need to actuarially certify that the premiums make sense for the policies they are marketing to the public. 

In the event an insurance company thinks they require a rate increase, they must go to the Department of Insurance in each state that they're looking for the increase, show a substantial need, based on actuarial data and have it impact a class of people in a product series (again - they can't just pick on you).

They are NOT allowed to price profit in any potential future rate increase.

Refer to this article:

Lastly, older legacy policies going through an approved rate increase, premiums for those policies are still significantly lower than what a new policy with the same benefits would cost today.

Clients could also keep their existing long-term care policies by being provided options to decrease their benefits to keep the premium lower or level.

There are other types of “newer” single premium or limited premium policies more recently available which eliminate the possibility of a rate increase. These "hybrid" plans give long term care protection, provide cash value, death benefits all in one. Please see the section on Hybrids in the website. 

Remember, few financial advisors or general insurance agents have expertise in Long-Term Care Insurance. Rich will help answer your questions and find appropriate coverage at a very affordable premium. 

This way, you can address the financial costs and burdens of aging so you can ease the burdens otherwise placed on your loved ones while safeguarding your savings.

Today's Long-Term Care Insurance is easy, affordable, and offers more rate stability with income and asset protection.

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