The head of national consumer education and advocacy group states the risk of future premium increases on today’s Long-Term Care Insurance is nil. This is good news as more people nowadays are planning for the costs and burdens associated with aging, health, and long-term care.
For many, Long-Term Care Insurance is a big part of retirement planning. However, some consumers are concerned with what they read about rate increases.
The American Association for Long-Term Care Insurance (AALTCI ) completed a study reviewing the pricing expert’s opinions of today’s Long-term Care Insurance. The research shows that under the new regulations, pricing, and actuarial methods, consumers face little if any chance of future rate increases under the products being sold today.
“Policies priced years ago using different assumptions have seen rate increases so consumers today assume they face the same risk.” “That’s simply not the case.” The AALTCI just released results of a poll of actuaries across the Long-Term Care Insurance industry.Jesse Slome, director of the AALTCI.
Rate Stabilization Rules Help Consumers Plan in Confidence
Rate stability rules that are in force in most states require even more conservative assumptions than ever before. (You can see if your state has these rules in place).These rules include several factors, including:
1. More accurate and conservative underwriting. Major companies have more knowledge and actual claims experience today than they did when they designed and priced the older “legacy” products. The insurance companies can price their products much more accurately since they know their expected claims and the health problems which initiated those claims. With this knowledge, they can set appropriate underwriting standards and rate classes and pricing that match the risks they are taking at the time of application.
2. Lapse rates. When insurance companies started selling Long-Term Care Insurance, they never expected policyholders to keep their policies in force in the numbers they actually do. They expected the lapse rates to be no different from any other type of policy. The fact is when a person purchases a Long-Term Care policy; it stays in force. The older legacy policies were never priced for low lapse rates. Companies now use a lapse rate assumption of less than one percent per year.
3. Interest rates. Did anyone expect interest rates to drop and stay as low as they have been for as long as they have been? The answer is no. The low-interest rates had a tremendous impact on the investment returns actuaries expected. Today’s Long-Term Care Insurance premiums reflect extremely low-interest rates. As the interest rates go up, pressure on interest rates from a premium standpoint goes down. This is good news for both the policyholder and the insurance company.
“Most actuaries responding see little or no the risk of needing future rate increases on recently priced policies.”Jesse Slome
Some 79.1 percent of the responding actuaries expressed the risk was 10 percent or less.
Articles About Older Legacy Products Don't Apply to Today's LTC Policies
Older Long-Term Care Insurance policies priced 10 or 20 years ago used different pricing assumptions and generally had specific policy provisions that necessitated the need for premium increases. When you read articles about premium increases, it applies to these older products, not today's Long-Term Care Insurance.
“Back in the 1990s, Long-Term Care Insurance was a new form of protection and there just wasn't the data available.”
“With several decades of experience and millions of policies sold and hundreds of thousands of claimants, policies priced today can more accurately project important aspects.”Jesse Slome
Today's LTC Insurance Provides Benefits Most People Want
Long-Term Care Insurance specialists have seen the industry grow and change over the decades.
"Thirty years ago, the only option for protection were nursing home only policies. Over time, as the market change and demand for planning increase, policies changed. They then provided a continuum of care from your home to assisted living facilities to nursing home care. With the expanded benefits, the industry did not price the products based on increased utilization, underwriting, and other actuarial considerations. Today's Long-Term Care Insurance remains very affordable, but is priced and designed to be rate stable," said Brent Donarski, a Long-Term Care specialist with 30 years' experience in the industry.
Donarski, who operates My LTC Specialist, says the industry has become much better in fulfilling the needs of individuals in need of care in the environment and care location they are most comfortable.
"I have assisted in thousands of claims with the adult children of the policyholder, and they have such a relief knowing that their parents planned ahead for their long-term care needs. Yes, the industry has had some challenges along the way, like other industries, but today has never been a better time for people who are interested in protecting their families from the emotional and financial burdens of long-term care. The good news is that today's Long-Term Care Insurance is priced with more experience and under new rules that make them affordable and rate stable,"Brent Donarski, a Long-Term Care specialist
Confidence in Today's Long-Term Care Insurance
The AALTCI report underscores confidence in the industry pricing models.
“I believe the risk of future rate increases is zero.”
“Rising interest rates and the new regulations mean someone purchasing a new Long-Term Care Insurance policy in 2018 and 2019 faces little if any chance of a future rate increase."Jesse Slome
The policy designs available in today’s products also add to the pricing confidence compared to older legacy products.
“Older policies with provisions like unlimited policy benefits or compounded annual benefit increases of five percent may face rate increases, but even these are never take-it or leave-it propositions. Insurers always offer options that enable the policyholder to avoid the increase.”
Three Types of Products Available
There are several ways consumers can plan for the financial costs and burdens of aging. These include:
1. Traditional Long-Term Care Insurance. This category includes partnership policies that are available in most states that offer additional dollar-for-dollar asset protection. Traditional LTC Insurance offers many affordable features and benefits, including shared spousal/partner plans. Tax incentives are available for some people and for the self-employed and businesses. Pre-tax money from Health Savings Accounts can also be used to pay premiums. Generally, these plans have more conservative underwriting but are priced very affordability, depending on your health and age at the time of application.
2. Asset-Based/Hybrid Plans. These are either life insurance or annuities with a rider to cover long-term care costs. They are often single premium products, but some companies offer limited payment options or even annual payment options with premiums can never increase. These plans provide a death benefit in the event the policy is not used for long-term care costs.
3. Limited Duration/Short-Term Plans. These plans are designed to provide a limited amount of benefits, often at home. The underwriting rules are usually broader, and the age limits for eligible applications are wider.
Donarski says an experienced Long-Term Care specialist can help you find an appropriate plan placed on your age, health, concerns, and budget.
Research Options with LTC NEWS Tools
Long-Term Care Insurance is custom designed. While a specialist can make professional recommendations, you get to decide the total amount of benefits you wish to have in place.
No matter the size of the policy, Long-Term Care Insurance is helping American families take care of their loved ones. In 2022 the major insurance companies paid over $13.2 Billion in benefits to American families.
These benefits provide the policyholders and their families with their choice of quality care in the setting they desire. The policyholder maintains control and independence.
Most states have rate stabilization rules in place. Forty-five states offer Partnership Long-Term Care Insurance policies that provide additional dollar-for-dollar asset protection. Find your state's details.
The cost of long-term care services increases every year. Find the current and future cost of care services in your area by using the LTC NEWS Cost of Care Calculator. You will also see key facts about your state, including the availability of tax incentives.
LTC NEWS can help you find a trusted and qualified specialist. A specialist can match your age, health, and other factors with the best options. Premiums vary between insurance companies by over 100% for the same benefits.
About the Author
An LTC News author focusing on long-term care and aging.
Contributor since August 21st, 2017
Planning for retirement is more than just saving money; it's about ensuring peace of mind, especially during economically shaky times. We all age, and as we do, the reality of potential health issues and their accompanying costs loom.
It's essential to anticipate these challenges, recognizing that our health and mobility might not always be on our side. Dementia, for instance, affects many, requiring additional supervision and care.
Simple daily tasks might become burdensome, necessitating external help. This help comes at a cost, be it hiring professional caregivers or relying on family members to step in. The financial strain of long-term care can be daunting. That's where Long-Term Care Insurance becomes invaluable. It offers tax-free benefits, ensuring you get the quality care you need without overburdening your loved ones.
If LTC Insurance sounds unfamiliar, a good starting point would be the Frequently Asked Questions on LTC News. Remember, securing a policy in your 40s or 50s can mean more affordable rates thanks to younger age and better health.
Navigating the World of Long-Term Care: Why Experts Matter
Having an expert by your side can make all the difference when considering long-term care options. Not all insurance agents or financial advisors have the niche expertise this field requires. It's wise to connect with a specialist, especially one familiar with the top insurance companies, since premiums can swing widely between companies, sometimes by more than 100%.
The most accomplished of these specialists might boast a clientele of over 500 individuals or more insured for long-term care. Experience counts and will help you find affordable coverage that fits your age and health.
By choosing to work with a dedicated expert, you not only can save money, but you can rest easier knowing that the recommendations you're receiving are well-informed. To make this journey a tad bit simpler, LTC News has resources like "Work With a Specialist." A knowledgeable specialist will tailor coverage to your unique needs, considering your age, health, and family history, ensuring you get value for every penny spent.
Be sure the professional you are working with works with top-rated insurance companies, not just one or two, so they can provide you with accurate quotes.
Planning Tools and Resources Available on LTC NEWS
Preparing for what lies ahead is challenging, especially when navigating the complexities of long-term health care. It's an emotional journey, but having the right guidance can simplify the path.
A primary aim should be to ease the burden and worry that often falls on loved ones during tough times. Turn to LTC NEWS for valuable insights and information to guide your decisions.
LTC NEWS has put in place several resources, including:
- The LTC NEWS Cost of Care Calculator will show you the current and future cost of long-term health care services where you live. Plus, each state has vital state-specific information you should know - LTC NEWS Cost of Care Calculator - Find Where You Live
- The Ultimate Long-Term Care Guide is an outstanding read to help you get a good overview of the topic area.
- Compare the major insurance companies that offer Long-Term Care Insurance products here - Top Insurers for Long-Term Care Insurance.
- A detailed tax guide that includes available tax incentives can be found by reviewing the Long-Term Care Tax Benefits Guide.
You might have questions, and LTC NEWS answers many of the most asked questions here - Frequently Asked Questions. Find all the resources available on LTC NEWS - Resources for Long-Term Care Planning.
Help for Your Older Parents
If your loved one is lucky enough to own a Long-Term Care Insurance policy, be sure they use it. Sometimes families wait, thinking they can save the benefits for a rainy day. Waiting on using available Long-Term Care Insurance benefits is not a wise idea.
If your parent or parents need help, get them the quality care they deserve. LTC NEWS can help. We have put together several comprehensive guides to help you in your process.
Start by reading our guides -
- Finding Quality In-Home Care | LTC News
- Adult Day Care Centers (ADCCs) | LTC News
- Assisted Living and Memory Care Facilities | LTC News
- Finding a Quality Nursing Home | LTC News
Get Assistance in Filing a Long-Term Care Insurance Claim
Many insurance companies have issued Long-Term Care Insurance policies over the years. Filing a claim can sometimes be complicated unless you know what to do or get expert help and assistance.
Don't allow the claim process to stop you from using the benefits of an LTC policy. Quality care obtained early will help provide a better quality of life and reduce the risk of a deep decline and facility care.
If you need help starting a Long-Term Care Insurance claim, LTC NEWS can help. LTC NEWS provides free assistance with no obligation to help you or a loved one complete the claims process with a Long-Term Care Insurance policy. We have teamed up with Amada Senior Care, who will do all the work - free with no obligation.
Get help finding quality caregivers or long-term care facilities and get recommendations for a proper care plan, whether a person has a policy. - Filing a Long-Term Care Insurance Claim.
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In summary, sponsored content on LTC NEWS is a powerful marketing tool that can help you boost website traffic, SEO, brand recognition, and audience engagement.
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