It does seem outrageous that there's no kind of cap on premium increases, and that insurance companies have the power to make the lapse rate a self-fulfilling prophecy by raising rates.
It may not be uniform since insurance is governed by state law, but it is very common when buying LTCi to be required to sign a form that says you've considered whether or not you could afford the policy if the premiums were increased by 20%. (In an older thread, by the way, I challenged an insurance agent's assertion; I would have sworn in a court of law that I hadn't ever signed such a thing. I didn't have a copy in my file folder. But I contacted my own agent, and she sent me a copy of her file copy. Yes, I had.) The exact language of the form I signed was:
Have you considered whether you could afford the policy if the premiums went up, for example, by 20%?
Now you can argue until the cows come home about what the agent and the insurance company's moral and/or legal obligations are, having set that expectation. It's not precise language, but 20% sure isn't doubling, either. It seems to me that in cases where the premium increase is obviously far, far beyond what could have been reasonably expected--with the signed disclaimer being the measure of "reasonable"--that the insurance company ought to be obligated to offer you the option of refunding all of the premiums you've paid (minus any benefits actually received). Would that my wishing could make it so.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.
