Long term care insurance fading away

[HardKnocker]

LTC as an insurance product seems to be in a death spiral.

The premiums are increasing so fewer people can afford to buy it. If fewer people buy it, the cost of providing benefits is spread over less and less policyholders.

As a result the premiums must be increased or benefits reduced.

As a result fewer will buy it.

As a result the premiums must be increased or benefits reduced.

As a result fewer will buy it...

[JMacDonald]

Even if you have LTC insurance, it doesn't mean that you can get the insurance company to pay:
http://www.latimes.com/business/la-fi-l ... 561.column

Rita Corwin, 90, conscientiously paid her premiums for long-term care insurance for 21 years to make sure that if she needed help as she grew older and more fragile, she'd get it.

Yet now that she finds herself in a position to require such assistance, her insurer, Washington National Insurance Co., is denying her claims.

[johnep]

When I purchased a medicare supplement policy for my wife 3 years ago, I asked the agent about LTC. Even though he could sell such policies, he recommended not buying one. That was a real eye opener for me. Based upon trend since then, he seems right.

[Honobob]

Well, you obviously got in when the gettin' was good. My point is that it ain't so good anymore.

I hear this rationalization often. When I bought over 10 years ago it wasn't a slam dunk decision. Yeah, yesterdays prices always seem better than today . Today is tomorrows yesterday. You have to make a decision based on today. I think I may have an edge on my policy but my rates. as a group, have risen. I expected rates to double every ten years. With my 5% ANNUAL benefit increase and inflation is my cost really increasing that much?

I've posted the incentives my LTCi offered to reduce premiums. I took the rate increase. I'll keep it as long as I feel secure about ability to be paid benefits TODAY and the near future and can afford the premiums. Now they're about a pack a cigarettes a day. For lifetime coverage and potential payments of $300,000-400,000 a year I think I could afford two or three packs a day.

Instead of plowing that extra two thousand into your 2.75 mortgage why not buy a policy now for a few years. Five years from now you might be happier having the policy instead of a mortgage being paid of in 2023.

[Needtoknow]

I bought a LTC policy two years ago for me and my wife. I don't regret it because I have seen the impact on my own family when my dad was suffering from cancer and needed long term care that he did not have. He was not eligible for medicaid and had a modest pension and social security. I had to worry constantly about him being able to be cared for properly from 3000 miles. He left a skilled nursing facility and had to go home. However, he needed an aide at home. If he had had LTCi, he would have been fine. It caused us all lots of anxiety and sacrifice to help maintain him.

I bought a policy to have something in place just in case. I did think of it like home insurance or earthquake insurance. It's just in case. I don't have a half million dollars to rebuild my home and it would bother me to have to buy another car if mine were totaled. That's why we have insurance to help in times of need and we cannot cover the cost.

[Jerilynn]

I bought a LTC policy two years ago for me and my wife. I don't regret it because I have seen the impact on my own family when my dad was suffering from cancer and needed long term care that he did not have. He was not eligible for medicaid and had a modest pension and social security. I had to worry constantly about him being able to be cared for properly from 3000 miles. He left a skilled nursing facility and had to go home. However, he needed an aide at home. If he had had LTCi, he would have been fine. It caused us all lots of anxiety and sacrifice to help maintain him.

I bought a policy to have something in place just in case. I did think of it like home insurance or earthquake insurance. It's just in case. I don't have a half million dollars to rebuild my home and it would bother me to have to buy another car if mine were totaled. That's why we have insurance to help in times of need and we cannot cover the cost.

If the premiums triple every year for the next 10, will you still keep it? [this is a yes or no question]

[Phineas J. Whoopee]

...
If the premiums triple every year for the next 10, will you still keep it? [this is a yes or no question]

I'm not Needtoknow but I'll answer. Of course not.

If the premiums drop by two thirds every year for the next 10, will you regret not buying it? [this is a yes or no question]

PJW

[Jerilynn]

...
If the premiums triple every year for the next 10, will you still keep it? [this is a yes or no question]

I'm not Needtoknow but I'll answer. Of course not.

Now we are getting somewhere. What about if the premiums rise 20% every year for the next 10?

If the premiums drop by two thirds every year for the next 10, will you regret not buying it? [this is a yes or no question]

Yes.

[Phineas J. Whoopee]

...
If the premiums triple every year for the next 10, will you still keep it? [this is a yes or no question]

I'm not Needtoknow but I'll answer. Of course not.

Now we are getting somewhere. What about if the premiums rise 20% every year for the next 10?

There would come some point at which it would no longer be a realistic choice, but let's not try to find it by successive approximations, especially in absence of knowledge of future general inflation. 3^10 = ~59,000. 1.2^10 = ~6. If and when an insurance company presented me with a price increase on any policy I held, regardless of type, I would decide based on my then-current circumstances.

If the premiums drop by two thirds every year for the next 10, will you regret not buying it? [this is a yes or no question]

Yes.

And I'm still not Needtoknow.

PJW
[Edited once to add a missing word.]

[Needtoknow]

I bought a 10 pay plan because I had read about the prices going up. However, I must tell you that as I looked at the CA state insurance's control on raising LTCi rates, I feel very fortunate because CA seems to be a lot tougher on insurance companies trying to raise rates than a lot of the others. I looked at requests from a variety of companies who wanted 60%, 80% and even 90% increases. Many states not only allowed them, but allowed the insurance companies to raise the rates by how much they requested. Looking at California, they rejected many of the increases and when they did they often allowed the premiums to be increased significantly less than was requested to the insurance companies.

[Needtoknow]

I want to also say that I will make this a priority to pay. I have assets that I would like to protect and thus, it is worth it to me. If I should get ill, I would not want to burden my wife and kids to take care of me. I consistently hear of people who need it and don't have it. It's no different than anything else. It's only when you don't have something and you need that you wish that you had it. I like to cover all of my bases. Also, I have 5% inflation adjustment for each year. I would not want to lose that. I also anticipated the amount might go up into my calculations. (No, I did not add in the premium trippling each year for 10 years.)

[Jerilynn]

There would come some point at which it would no longer be a realistic choice, but let's not try to find it by successive approximations, especially in absence of knowledge of future general inflation. 3^10 = ~59,000. 1.2^10 = ~6. If and when an insurance company presented me with a price increase on any policy I held, regardless of type, I would decide based on my then-current circumstances.

Makes sense.

I'm thinking that this will happen sooner rather than later (based on what happened the last year or so) and many people will regret buying the LTC in the first place. No way to accurately predict it now. Time will tell, however.


I admit that it's entirely possible that sometime in the future, some people will be very thankful that they did buy a LTC policy and that the premium price increases will be "tolerable".

[TravelforFun]

Have had LTC insurance with Unum through my company for the last few years and I haven't noticed major rate increases. I'm paying $236 a month for me and my wife on a $6,000 a month inflation-protected policy. I'll hang on to it as long as I can. Hopefully the longer I have it, the longer I can keep major disability incident from striking us.

[Phineas J. Whoopee]

There would come some point at which it would no longer be a realistic choice. If and when an insurance company presented me with a price increase on any policy I held, regardless of type, I would decide based on my then-current circumstances.

Makes sense.

I'm thinking that this will happen sooner rather than later (based on what happened the last year or so) and many people will regret buying the LTC in the first place. No way to accurately predict it now. Time will tell, however.


I admit that it's entirely possible that sometime in the future, some people will be very thankful that they did buy a LTC policy and that the premium price increases will be "tolerable".

Thanks Jerilynn.

You silently edited out the math. Why? Including, why silently? It can't be the four orders of magnitude difference, can it?

PJW

[Jerilynn]

There would come some point at which it would no longer be a realistic choice. If and when an insurance company presented me with a price increase on any policy I held, regardless of type, I would decide based on my then-current circumstances.

Makes sense.

I'm thinking that this will happen sooner rather than later (based on what happened the last year or so) and many people will regret buying the LTC in the first place. No way to accurately predict it now. Time will tell, however.


I admit that it's entirely possible that sometime in the future, some people will be very thankful that they did buy a LTC policy and that the premium price increases will be "tolerable".

Thanks Jerilynn.

You silently edited out the math. Why? Including, why silently? It can't be the four orders of magnitude difference, can it?

PJW

I edited it out for 2 reasons.
1. For brevity
2. I didn't understand what the heck you were talking about.

[Phineas J. Whoopee]

There would come some point at which it would no longer be a realistic choice. If and when an insurance company presented me with a price increase on any policy I held, regardless of type, I would decide based on my then-current circumstances.

Makes sense.

I'm thinking that this will happen sooner rather than later (based on what happened the last year or so) and many people will regret buying the LTC in the first place. No way to accurately predict it now. Time will tell, however.


I admit that it's entirely possible that sometime in the future, some people will be very thankful that they did buy a LTC policy and that the premium price increases will be "tolerable".

Thanks Jerilynn.

You silently edited out the math. Why? Including, why silently? It can't be the four orders of magnitude difference, can it?

PJW

I edited it out for 2 reasons.
1. For brevity

OK, I guess, but it was such a substantial part of the paragraph's reasoning I thought at least some indication was in order. The paragraph you quoted doesn't properly reflect what I wrote, which was in response to your second question about annual premium increases. I agree there can be times a paragraph can be edited if one is responding only to one part of it, but the omissions should be indicated.

2. I didn't understand what the heck you were talking about.

My fault then for not being explicit enough.

You initially asked what if the premium tripled every year for 10 years. The end result would be:
3^10 [3 to the 10th power] = ~59,000. The premium after ten years would be about 59,000 times as high as it had been initially.

Then you asked about the premium going up by 20% every year for 10 years. The end result would be:
1.2^10 [1.2 to the 10th power] = ~6. The premium would be about six times as high.

That means your original question gave a result around 10,000 times worse than your later question. I was demonstrating that the outcome of your original, tripling question over your later, 20% increase question, was four orders of magnitude different, and therefore might well have led to different conclusions. That's why I didn't want us to resort to successive approximations. There would come a point where the premium didn't make sense. Maybe that point is less than a sixfold increase. Maybe it's more, depending on circumstance. I think it would come way before a 59,000-fold increase.

Six times as high is a lot, but depending on what had happened in between, in the market, the economy, and personally, could potentially be supportable. A premium 59,000 times as much could reflect original errors of that magnitude in pricing, which would mean I would have to drop it, or massive price inflation, in which case I would probably have bigger fish to fry.

(In case anyone is interested, the alternate yearly drop by 2/3 scenario I suggested in response to tripling annually for 10 years leads to a premium reduction of 99.998%. I only went out as many digits as I had to in order to keep it from rounding to a 100% decrease.)

Hope that helps.

PJW

[Jerilynn]

There would come some point at which it would no longer be a realistic choice. If and when an insurance company presented me with a price increase on any policy I held, regardless of type, I would decide based on my then-current circumstances.

Makes sense.

I'm thinking that this will happen sooner rather than later (based on what happened the last year or so) and many people will regret buying the LTC in the first place. No way to accurately predict it now. Time will tell, however.


I admit that it's entirely possible that sometime in the future, some people will be very thankful that they did buy a LTC policy and that the premium price increases will be "tolerable".

Thanks Jerilynn.

You silently edited out the math. Why? Including, why silently? It can't be the four orders of magnitude difference, can it?

PJW

I edited it out for 2 reasons.
1. For brevity

OK, I guess, but it was such a substantial part of the paragraph's reasoning I thought at least some indication was in order. The paragraph you quoted doesn't properly reflect what I wrote, which was in response to your second question about annual premium increases. I agree there can be times a paragraph can be edited if one is responding only to one part of it, but the omissions should be indicated.

2. I didn't understand what the heck you were talking about.

My fault then for not being explicit enough.

You initially asked what if the premium tripled every year for 10 years. The end result would be:
3^10 [3 to the 10th power] = ~59,000. The premium after ten years would be about 59,000 times as high as it had been initially.

Then you asked about the premium going up by 20% every year for 10 years. The end result would be:
1.2^10 [1.2 to the 10th power] = ~6. The premium would be about six times as high.

That means your original question gave a result around 10,000 times worse than your later question. I was demonstrating that the outcome of your original, tripling question over your later, 20% increase question, was four orders of magnitude different, and therefore might well have led to different conclusions. That's why I didn't want us to resort to successive approximations. There would come a point where the premium didn't make sense. Maybe that point is less than a sixfold increase. Maybe it's more, depending on circumstance. I think it would come way before a 59,000-fold increase.

Six times as high is a lot, but depending on what had happened in between, in the market, the economy, and personally, could potentially be supportable. A premium 59,000 times as much could reflect original errors of that magnitude in pricing, which would mean I would have to drop it, or massive price inflation, in which case I would probably have bigger fish to fry.

(In case anyone is interested, the alternate yearly drop by 2/3 scenario I suggested in response to tripling annually for 10 years leads to a premium reduction of 99.998%. I only went out as many digits as I had to in order to keep it from rounding to a 100% decrease.)

Hope that helps.

PJW

I went back and re-edited it so that part of your post is identical.

[gerntz]

I read this increase to be on new coverage, not existing coverage; i.e., not raising current customers' rates. Right/wrong?

[dhodson]

is your question that you dont know if they can increase both new and existing customers?

Yes they can do both. The complaints here and elsewhere are about on existing customers. Im not sure why people would complain about rate increases on something they havent purchased. Except for single pay policies (meaning you pay it all upfront), the company can increase rates. They need to get approval from the state insur comm but that is typically a very small hurdle but varies on how small/large from state to state. For other limited pay policies such as 10 years it seems like the number of potential increases would be less but that isnt for certain.

[Browser]

I was just wondering. Since LTCI provides a major benefit to the survivors of the insured, why don't they pay the premiums? Or at least share part of the expense. When I reach the point that I'd actually need it, I'm not sure I'd care that much anymore. And the last thing I'd want to worry about it, if I were even able, is whether the insurance company is still around or having to deal with them. But my heirs probably would.

[bluemarlin08]

I have several clients that pay the premium for LTCi for their parents. Parents can't afford and the kids can, and they don't want to rely on the limited options provided by Medicaid.