Long Term Care Insurance

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bertilak
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Long Term Care Insurance

Post by bertilak »

I have a Long Term Care Insurance policy. Every three years I get the option of increasing my coverage to keep up with inflation.

That third year just came up. The premium increase was 50% but the dollar amount of the coverage increase was only about 16%. A call to the company did not get an explanation for this apparent discrepancy. They did tell me it is NOT because I am three years older. It is NOT an actuarial effect.

My current position is NOT to go for this increase even though I have been keeping up with it for years. I still have time to decide.

ANY COMMENTS?
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arcticpineapplecorp.
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Re: Long Term Care Insurance

Post by arcticpineapplecorp. »

two thoughts:
1. the rate or increase is based on increases passed on to the group of insured in your state (they got approval from state insurance commission to raise costs as a group).
2. did they underprice originally and are attempting to make up for that?
3. have there been price increases in the past that haven't been in the 50% range?
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pshonore
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Re: Long Term Care Insurance

Post by pshonore »

bertilak wrote: Tue Sep 01, 2020 10:00 am I have a Long Term Care Insurance policy. Every three years I get the option of increasing my coverage to keep up with inflation.

That third year just came up. The premium increase was 50% but the dollar amount of the coverage increase was only about 16%. A call to the company did not get an explanation for this apparent discrepancy. They did tell me it is NOT because I am three years older. It is NOT an actuarial effect.

My current position is NOT to go for this increase even though I have been keeping up with it for years. I still have time to decide.

ANY COMMENTS?
I doubt you have a choice (other than possibly foregoing the inflation increase) if you want to continue your coverage. Otherwise the policy will lapse and you'll wind up with a "paid-up benefit" of a fixed benefit amount representing a few months coverage to be used in the future. Genworth has given me a similar choice. The amount varies by State regulation.
prd1982
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Re: Long Term Care Insurance

Post by prd1982 »

If you search this forum, you will see a number of threads talking about this problem. As previously mentioned, providers underestimated the cost of providing the long term care, and underestimated the number of people who would drop the policy before collecting. Your % increase is not unusual. You should also expect the cost to continue to rise. Only you can determine if worth it. You can see from this forum that most people are keeping it. But that is because we have been paying into it for a number of years.

I would suggest looking at your state's insurance web site to see if they maintain a database of LTC insurance increases requested and provided. At least for my state, I see that the state is granting a larger % of the requested amounts. And for those not fully granted, the insurance company comes back the next year, asking for the remainder (plus some).
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bertilak
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Re: Long Term Care Insurance

Post by bertilak »

Having put my question in writing in this forum I realized the answer they gave me saying the increase was NOT (in part) because I was three years older and that there was no actuarial component to the increase made no sense so I called them back a few minutes ago.

This time I got someone apparently a bit smarter and/or more informed. Or maybe I was more coherent in asking the question. This time I was told that, yes indeed, my being three years older DID explain contribute to the "discrepancy" between 16.6% increase in coverage and 50% increase in premium -- There IS an actuarial effect.

I also asked about NOT accepting the offer and STILL being 3 years older and my premium not going up because of that age difference. The answer had something to do with my previous payments already buying this coverage and therefor paying for any actuarial effects on that level of coverage. I'm still thinking that this "offer" is just a way for them (essentially) to sell me a WHOLE NEW policy at the new higher coverage at a new higher age. I still think turning it down is the best move. I continue to have the existing coverage at the existing premium, which seems to be a much better deal than what they are now offering.

The new offer is MORE than an inflation increase, it is (at least in part) a new policy issued at my new age.
Last edited by bertilak on Tue Sep 01, 2020 11:00 am, edited 1 time in total.
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bertilak
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Re: Long Term Care Insurance

Post by bertilak »

arcticpineapplecorp. wrote: Tue Sep 01, 2020 10:14 am two thoughts:
1. the rate or increase is based on increases passed on to the group of insured in your state (they got approval from state insurance commission to raise costs as a group).
2. did they underprice originally and are attempting to make up for that?
3. have there been price increases in the past that haven't been in the 50% range?
1. I'm sure that's true. It is a group policy and there are even different people to talk to compared to their "regular" clients. The last time I called they had to transfer me to their "group" support people. This time I think I called the group support directly.

2. The original price (and even my current price) is lower than I can get today on the open market -- I checked a year or so ago. Maybe now they are trying to nudge me closer to a market price.

3. There were price increases in the past but they were not so dramatic (50%) so I didn't really look to hard at them. I still have all the older records so I can look back if I feel it is worth the trouble. I think it isn't worth the trouble because I can't think of any action I would take based on the results of that.
Last edited by bertilak on Tue Sep 01, 2020 11:01 am, edited 1 time in total.
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bertilak
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Re: Long Term Care Insurance

Post by bertilak »

pshonore wrote: Tue Sep 01, 2020 10:25 am I doubt you have a choice (other than possibly foregoing the inflation increase) if you want to continue your coverage. Otherwise the policy will lapse and you'll wind up with a "paid-up benefit" of a fixed benefit amount representing a few months coverage to be used in the future. Genworth has given me a similar choice. The amount varies by State regulation.
Nothing will lapse. I just won't get the increased coverage. They told me that in another three years I will get another chance, but it will be more expensive because I will then be 6 years older than today (not just 3 years older).

According to them, the MAIN BENEFIT of the offer is that I do not need to re-qualify as if I were buying the insurance for the first time.
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texasgal47
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Re: Long Term Care Insurance

Post by texasgal47 »

What is the inflation rate adjustment written into your original policy? Is it a compounded inflation adjustment? What is the average increase in costs for long-term care for your area, or where you plan to retire?

For example, my policy has a 5% yearly compounded increase in value. This is same same rate of increase in cost for assisted living and long-term care for the area in which I currently reside.
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bertilak
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Re: Long Term Care Insurance

Post by bertilak »

texasgal47 wrote: Tue Sep 01, 2020 12:29 pm What is the inflation rate adjustment written into your original policy? Is it a compounded inflation adjustment? What is the average increase in costs for long-term care for your area, or where you plan to retire?

For example, my policy has a 5% yearly compounded increase in value. This is same same rate of increase in cost for assisted living and long-term care for the area in which I currently reside.
There is no inflation rate adjustment written into my original policy.

EDIT: Perhaps this is one reason it was so reasonably priced!
May neither drought nor rain nor blizzard disturb the joy juice in your gizzard. -- Squire Omar Barker (aka S.O.B.), the Cowboy Poet
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