Massive Increase in Long Term Care Insurance for My Parents - Can They?

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
Topic Author
WolfgangPauli
Posts: 310
Joined: Sun Aug 23, 2015 8:28 am

Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by WolfgangPauli » Wed Mar 13, 2019 10:55 pm

Hi,

I am sure the answer is "yes they can" but it certainly seems crazy what I am about to write and I would like any advice about anything I can do. Here is the situation:

My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986. Last year my Dad had a stroke and we were able to bring him back to recovery enough that we never filed for the nursing home insurance. So, the key point here is they have been paying since 1986 and never once collected a nickel on it.

We just received a notice that their quarterly premiums are going from $480 to almost $900! Of course, my parents are on a fixed income and that is a killer. Our choices are to let it lapse, keep the premium where it is but accept lower amounts or pay up.

It just seems like an open ended contract that when you get to the age where you are more likely to use it they jack it up so high you end up bowing out. Really ridiculous in my mind. And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.

Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.

Thank you
Twitter: @JAXbogleheads | EM: JAXbogleheads@gmail.com

User avatar
BL
Posts: 9160
Joined: Sun Mar 01, 2009 2:28 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by BL » Thu Mar 14, 2019 12:13 am

This has been happening for a long time. You have the choices and will need to consider them. Can the children help pay? Would it make sense to pay the same with lower benefits? Tough choices, I know. You might be able to search Bogleheads for other threads on the subject. We certainly don't know the circumstances enough to make a reasonable suggestion on which one. Perhaps it will be an easier decision based on their life expectancy, but maybe not so much. Do they have a legacy to preserve? Are you willing to see them on Medicaid if they would run out of funds? Have you researched local costs for nursing facilities? Is home care covered?

Dottie57
Posts: 7133
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Dottie57 » Thu Mar 14, 2019 12:17 am

WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
Hi,

I am sure the answer is "yes they can" but it certainly seems crazy what I am about to write and I would like any advice about anything I can do. Here is the situation:

My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986. Last year my Dad had a stroke and we were able to bring him back to recovery enough that we never filed for the nursing home insurance. So, the key point here is they have been paying since 1986 and never once collected a nickel on it.

We just received a notice that their quarterly premiums are going from $480 to almost $900! Of course, my parents are on a fixed income and that is a killer. Our choices are to let it lapse, keep the premium where it is but accept lower amounts or pay up.

It just seems like an open ended contract that when you get to the age where you are more likely to use it they jack it up so high you end up bowing out. Really ridiculous in my mind. And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.

Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.

Thank you
Pretty sure they can raise the premium. The amount is reasonable given it is for two people. I pay 2700 for my LTC policy. Max of about 300k total payments. I would help my parents pay for it. It may. Save some heartache later on.

FBN2014
Posts: 678
Joined: Sat Mar 08, 2014 3:07 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by FBN2014 » Thu Mar 14, 2019 4:15 am

This is why I would never buy a traditional LTC policy. Much better to use a hybrid policy.
"October is one of the peculiarly dangerous months to speculate in stocks. The others are July, January, September, April, November, May March, June, December, August and February." - M. Twain

thx1138
Posts: 997
Joined: Fri Jul 12, 2013 2:14 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by thx1138 » Thu Mar 14, 2019 4:51 am

FBN2014 wrote:
Thu Mar 14, 2019 4:15 am
This is why I would never buy a traditional LTC policy. Much better to use a hybrid policy.
Yeah sure, because we all know making a complicated hybrid product lowers costs and is better for the consumer.

Hybrid policies are poison. The underlying LTC problem is no different than in a stand alone LTC but those problems are masked in the hybridization while as usual overall increasing costs to the consumer.

Leesbro63
Posts: 5987
Joined: Mon Nov 08, 2010 4:36 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Leesbro63 » Thu Mar 14, 2019 5:17 am

At the parents’ ages, this is also about the senior-citizen (or close) “kids”. If there are assets that the “kids” might inherit, then it’s a calculation of how much they might pay to continue the LTC policies vs the odds of the assets dwindling. Also having the policies may give the parents better nursing home options. If any of the children can’t or won’t pay, perhaps those who can or will should do so, structuring the payment as a loan against the parents’ future possible estate.

It’s sad to see a situation like this where well-intentioned folks pay for more than a generation then get throttled near the finish line.

Dandy
Posts: 6000
Joined: Sun Apr 25, 2010 7:42 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Dandy » Thu Mar 14, 2019 5:29 am

I usually try to insure most things and I'd love to insure long term care. But the insurance companies can't see to get the underwriting right. That might be because of increases in life expectancy, advanced medical treatments and rapidly rising nursing home costs. So, they have been jacking up rates, exiting the business etc.

I think I have enough to self insure but am not happy having this insurable risk being self insured. I think if I were you I'd try to keep the policies in force with very old parents one of which had a major health issue. The monthly cost of nursing home care can be in the thousands vs the premium increase. The prior premiums are gone not matter what.

I don't think the insurance companies are evil I just think they are stuck with a product they can't seem to handle. Also they face adverse selection with the insureds in ill health will tend to keep the insurance and the healthier insureds will tend to be the ones dropping out.

chazas
Posts: 60
Joined: Wed Nov 01, 2017 1:22 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by chazas » Thu Mar 14, 2019 5:52 am

Yikes. I’m so sorry. I have a group LTC policy that continued after the demise of an employer - had it for about 15 years. They’ve raised rates a couple of times in modest amounts but it’s completely paid up and noncancellable when we each turn 65. I ponder the expense every once in a while then decide it’s a good gamble.

User avatar
8foot7
Posts: 1664
Joined: Mon Jan 05, 2015 7:29 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by 8foot7 » Thu Mar 14, 2019 5:54 am

This will sound morbid but do your parents have substantial assets?
The premium increase is a low enough amount of money in the absolute sense that I'd probably chip in and pay the difference between 480 and 900 just to help my parents out. At some point, though, if there isn't money to otherwise protect from being drawn down in assisted living for years, I would consider letting Medicaid take care of things.

muffin
Posts: 5
Joined: Sun Jan 12, 2014 3:21 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by muffin » Thu Mar 14, 2019 6:15 am

My husband just passed away in a nursing home in CT. We didn't qualify for Medicaid and had to private pay. The charge was $541 a day and the total amount paid was almost $70,000

User avatar
dwickenh
Posts: 1763
Joined: Sun Jan 04, 2015 9:45 pm
Location: Illinois

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by dwickenh » Thu Mar 14, 2019 7:00 am

FBN2014 wrote:
Thu Mar 14, 2019 4:15 am
This is why I would never buy a traditional LTC policy. Much better to use a hybrid policy.
I don't think they were available in 1986.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

User avatar
dwickenh
Posts: 1763
Joined: Sun Jan 04, 2015 9:45 pm
Location: Illinois

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by dwickenh » Thu Mar 14, 2019 7:01 am

muffin wrote:
Thu Mar 14, 2019 6:15 am
My husband just passed away in a nursing home in CT. We didn't qualify for Medicaid and had to private pay. The charge was $541 a day and the total amount paid was almost $70,000
Sorry for your loss, and thanks for sharing the costs involved as it may help with decisions on LTC.

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

Jack FFR1846
Posts: 10454
Joined: Tue Dec 31, 2013 7:05 am
Location: 26 miles, 385 yards west of Copley Square

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Jack FFR1846 » Thu Mar 14, 2019 7:10 am

$300 a month sounds dirt cheap to me. We had a relative in a nursing home following a hospital stay 10 years ago. Back then, it was $12k a month.
Bogle: Smart Beta is stupid

TN_Boy
Posts: 1259
Joined: Sat Jan 17, 2009 12:51 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by TN_Boy » Thu Mar 14, 2019 8:17 am

Dottie57 wrote:
Thu Mar 14, 2019 12:17 am
WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
Hi,

I am sure the answer is "yes they can" but it certainly seems crazy what I am about to write and I would like any advice about anything I can do. Here is the situation:

My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986. Last year my Dad had a stroke and we were able to bring him back to recovery enough that we never filed for the nursing home insurance. So, the key point here is they have been paying since 1986 and never once collected a nickel on it.

We just received a notice that their quarterly premiums are going from $480 to almost $900! Of course, my parents are on a fixed income and that is a killer. Our choices are to let it lapse, keep the premium where it is but accept lower amounts or pay up.

It just seems like an open ended contract that when you get to the age where you are more likely to use it they jack it up so high you end up bowing out. Really ridiculous in my mind. And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.

Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.

Thank you
Pretty sure they can raise the premium. The amount is reasonable given it is for two people. I pay 2700 for my LTC policy. Max of about 300k total payments. I would help my parents pay for it. It may. Save some heartache later on.
The cost isn't all that bad, the strange part (to me) is that the policy only pays for skilled nursing facilities, as I read the post. So the problem is that extended stays in skilled nursing are relatively uncommon . ... and that the policy apparently does nothing to help with the much more likely lower levels of care.

It's a slight tangent, but how common are "skilled nursing only" LTC plans? I would definitely counsel against buying such a policy.

Dottie57
Posts: 7133
Joined: Thu May 19, 2016 5:43 pm
Location: Earth Northern Hemisphere

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Dottie57 » Thu Mar 14, 2019 8:24 am

TN_Boy wrote:
Thu Mar 14, 2019 8:17 am
Dottie57 wrote:
Thu Mar 14, 2019 12:17 am
WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
Hi,

I am sure the answer is "yes they can" but it certainly seems crazy what I am about to write and I would like any advice about anything I can do. Here is the situation:

My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986. Last year my Dad had a stroke and we were able to bring him back to recovery enough that we never filed for the nursing home insurance. So, the key point here is they have been paying since 1986 and never once collected a nickel on it.

We just received a notice that their quarterly premiums are going from $480 to almost $900! Of course, my parents are on a fixed income and that is a killer. Our choices are to let it lapse, keep the premium where it is but accept lower amounts or pay up.

It just seems like an open ended contract that when you get to the age where you are more likely to use it they jack it up so high you end up bowing out. Really ridiculous in my mind. And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.

Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.

Thank you
Pretty sure they can raise the premium. The amount is reasonable given it is for two people. I pay 2700 for my LTC policy. Max of about 300k total payments. I would help my parents pay for it. It may. Save some heartache later on.
The cost isn't all that bad, the strange part (to me) is that the policy only pays for skilled nursing facilities, as I read the post. So the problem is that extended stays in skilled nursing are relatively uncommon . ... and that the policy apparently does nothing to help with the much more likely lower levels of care.

It's a slight tangent, but how common are "skilled nursing only" LTC plans? I would definitely counsel against buying such a policy.
Your parents have an older policy. I don’t know when assisted living became common, it certainly wasn’t around in the 70’s when my great grandmother was placed in a nursing home but didn’t need nursing services.

Leesbro63
Posts: 5987
Joined: Mon Nov 08, 2010 4:36 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Leesbro63 » Thu Mar 14, 2019 8:25 am

I think those policies were a common product of the 1980s (as seen here).

Mitchell777
Posts: 1082
Joined: Mon May 21, 2007 6:32 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Mitchell777 » Thu Mar 14, 2019 8:49 am

Looking at the $480/quarter they were paying for over 30 years (I know it was lower in the past due to inflation) and adding a return to that, if they had been saving that money they would probably have enough to pay for one year in a nursing home for one person (in MY area where it costs ~ $140,000/year. At your parents age and the condition of your father, I'd pay the increase. If they have little or nothing in assets it could change the decision, but I'd still want the choice for a private pay facility.

smitcat
Posts: 4309
Joined: Mon Nov 07, 2016 10:51 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by smitcat » Thu Mar 14, 2019 9:31 am

I do not know how anyone can reasonably assess the decision at hand without knowing the details of the policy - what is the deductible? what are the limits per time interval? what are the total limits? What exactly is covered by person and in total? etc.

Sailorgirl
Posts: 23
Joined: Fri Mar 23, 2018 4:28 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Sailorgirl » Thu Mar 14, 2019 9:34 am

My parents are 93 dad and 92 mom. Last summer after my mom fell it became necessary to move them to an assisted living facility after living in an independent facility for 6 years. They had exhausted all of their assests including the cash value of life insurance policies. My sisters and our husbands have been contributing to their care for the last three years. After a pretty extensive search in the area were they were living we moved them to assisted living closer to a different sister in Tennessee. it was considerably cheaper and nicer. My parents no longer have the physical and cognitive skills that they had when the were 89 and 90. They still had a car and regularly went out to lunch.

I would suggest that you start using that policy and get them the care the need. My parents had SS and a small pension. We applied for VA benefits and just started receiving them this month. It is a blessing since we were collectively contributing almost $1500/mo.

This is an important Question. Do the premiums stop increasing once the policy is activated?

These are your parents and they deserve dignified care. Children with the ability to help their parents should always do so even if it is just to set a proper example of love and family to their children.

User avatar
Stinky
Posts: 2445
Joined: Mon Jun 12, 2017 11:38 am
Location: Sweet Home Alabama

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Stinky » Thu Mar 14, 2019 9:47 am

WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
Hi,

I am sure the answer is "yes they can" but it certainly seems crazy what I am about to write and I would like any advice about anything I can do. Here is the situation:

My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986. Last year my Dad had a stroke and we were able to bring him back to recovery enough that we never filed for the nursing home insurance. So, the key point here is they have been paying since 1986 and never once collected a nickel on it.

We just received a notice that their quarterly premiums are going from $480 to almost $900! Of course, my parents are on a fixed income and that is a killer. Our choices are to let it lapse, keep the premium where it is but accept lower amounts or pay up.

It just seems like an open ended contract that when you get to the age where you are more likely to use it they jack it up so high you end up bowing out. Really ridiculous in my mind. And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.

Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.

Thank you
I expect that Allstate is well within their policy rights to increase premiums.

Most products like this are "guaranteed renewable"; that is, the insurance company can't unilaterally cancel, but can change premiums going forward with actuarial justification. In most states, the state insurance department must approve the rate increase. Rate increases must be applied to all policies in a "class", and are not based on individual claim experience.

So it's likely that the rate increase (1) is actuarially justified, and (2) has been approved by your state insurance department. No use in getting a lawyer involved. You could call or write the insurance company to ask for more details - they expect that policyholders will contact them when such a large rate increase is received.

A couple of comments / observations. First, is this the first rate increase on this policy? They've done pretty well if they've gone 30+ years at the original premium. Second, I'm a bit surprised at the large percentage increase, especially if your parents had gone 30+ years with unchanged rates. Typically, insurers prefer to have smaller and more frequent rate increases - easier to get state approval, and less adverse policyholder reactions.

Rate increases like this show why many folks distrust insurance companies.
It's a GREAT day to be alive - Travis Tritt

usa
Posts: 3
Joined: Sat May 27, 2017 2:10 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by usa » Thu Mar 14, 2019 9:52 am

I have been paying premiums for 17 years now for a comprehensive policy for myself with 5 percent annual coverage increase.

The last time I added it up, the total amount of premiums I have paid to date for my policy is less than 1 month of the price of my mother's current nursing home care.

Nursing home care, particularly in in a good facility in a metropolitan area, is very expensive.
Last edited by usa on Thu Mar 14, 2019 11:09 am, edited 1 time in total.

User avatar
JoeRetire
Posts: 3872
Joined: Tue Jan 16, 2018 2:44 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by JoeRetire » Thu Mar 14, 2019 9:57 am

WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986.
And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.
This is confusing.

You call it a "Nursing Home" policy that won't pay anything for a long term care assisted living facility. Yet your title talks about an increase in Long Term are Insurance.

Seems like it's not actually LTCi?
Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.
You would probably be better off talking to Allstate, rather than a lawyer. It certainly would be cheaper.
I'm guessing that no laws were broken.

If it were my parents, I'd call Allstate, understand what the plan actually covers, then advise my parents accordingly.
Last edited by JoeRetire on Thu Mar 14, 2019 10:01 am, edited 1 time in total.
Don't be a lemming.

Leesbro63
Posts: 5987
Joined: Mon Nov 08, 2010 4:36 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Leesbro63 » Thu Mar 14, 2019 9:59 am

Sailorgirl wrote:
Thu Mar 14, 2019 9:34 am


These are your parents and they deserve dignified care. Children with the ability to help their parents should always do so even if it is just to set a proper example of love and family to their children.
I agree with this. And that’s why I view the decision to keep the policy and perhaps pay it for the parents as being an issue for the adult children. Paying the increased premiums might still be the best financial decision.

adamthesmythe
Posts: 3027
Joined: Mon Sep 22, 2014 4:47 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by adamthesmythe » Thu Mar 14, 2019 10:01 am

WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
Hi,

I am sure the answer is "yes they can" but it certainly seems crazy what I am about to write and I would like any advice about anything I can do. Here is the situation:

My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986. Last year my Dad had a stroke and we were able to bring him back to recovery enough that we never filed for the nursing home insurance. So, the key point here is they have been paying since 1986 and never once collected a nickel on it.

We just received a notice that their quarterly premiums are going from $480 to almost $900! Of course, my parents are on a fixed income and that is a killer. Our choices are to let it lapse, keep the premium where it is but accept lower amounts or pay up.

It just seems like an open ended contract that when you get to the age where you are more likely to use it they jack it up so high you end up bowing out. Really ridiculous in my mind. And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.

Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.

Thank you
1. You haven't said anything about the benefits provided by the policy. You can't make a decision about keeping the policy without comparing PRESENT costs to POTENTIAL (at this point, likely?) benefits.

2. If there has been no increase since 1986 your parents have been very very fortunate.

Leesbro63
Posts: 5987
Joined: Mon Nov 08, 2010 4:36 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Leesbro63 » Thu Mar 14, 2019 10:29 am

Leesbro63 wrote:
Thu Mar 14, 2019 9:59 am
Sailorgirl wrote:
Thu Mar 14, 2019 9:34 am


These are your parents and they deserve dignified care. Children with the ability to help their parents should always do so even if it is just to set a proper example of love and family to their children.
I agree with this. And that’s why I view the decision to keep the policy and perhaps pay it for the parents as being an issue for the adult children. Paying the increased premiums might still be the best financial decision.
Addition to my last comment, above: I guess what I’m saying is that all along the decision to have nursing home insurance was the parents’. And instead of the kids suddenly having to own the problem during a medical and or financial crisus, perhaps this is the real moment that the kids become owners of the problem of having aging parents. Even if they ignore the problem and fail to recognize ownership, the kids effectively do now own it. Because the consequences will affect them either way. And may be worse if they defer recognition of owning the problem than if they recognize it now.
Last edited by Leesbro63 on Thu Mar 14, 2019 10:44 am, edited 1 time in total.

fposte
Posts: 1726
Joined: Mon Sep 02, 2013 1:32 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by fposte » Thu Mar 14, 2019 10:38 am

JoeRetire wrote:
Thu Mar 14, 2019 9:57 am
WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986.
And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.
This is confusing.

You call it a "Nursing Home" policy that won't pay anything for a long term care assisted living facility. Yet your title talks about an increase in Long Term are Insurance.

Seems like it's not actually LTCi?
More recent LTCi is likelier to cover both a stay in a Skilled Nursing Facility and assisted living. The OP's parents' policy apparently only covers SNF care. Assisted living, which offers support to people who can't safely live independently but not the medical bed and care of an SNF, isn't covered.

WoW2012
Posts: 590
Joined: Sun Dec 23, 2012 11:28 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by WoW2012 » Thu Mar 14, 2019 12:52 pm

Your parents have not been singled out for this rate increase. The rate increase has nothing to do with their age nor their change in health. The same increase has been requested in over 40 states on all Allstate LTCi policyholders in every age group.

Allstate sold very few long-term care insurance policies starting in the late 1980's to the mid 1990's when they started selling LTCi through their subsidiary "Lincoln Benefit Life". As of 2018, there were only 1,799 in-force "Allstate" long-term care insurance policies. This is the second rate increase on this policy series. The first rate increase was in 2010 and it was for 20%.

All of the Allstate LTCi policies were sold under the old rules. These policies, unfortunately, are not governed by the Rate Stability Regulation which is in effect in 41 states.

Your parents policy probably has a 5% compound inflation benefit and a lifetime/unlimited benefit period. It probably has a very short elimination period, too, like 20 days or less. And, because of the 5% compound inflation benefit, your parents probably have a daily benefit that is much greater than the actual cost of care in your area. Allstate is offering policyholders ways to modify the benefits to avoid the rate increase. It's called a "landing spot". I'm not privy to the specifics, but it is likely your parents could avoid the rate increase if they took advantage of one of these "landing spots". If you'd like to call Allstate and find out more about it, please share it on the forum and we can help you make a decision.

WoW2012
Posts: 590
Joined: Sun Dec 23, 2012 11:28 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by WoW2012 » Thu Mar 14, 2019 12:56 pm

FBN2014 wrote:
Thu Mar 14, 2019 4:15 am
This is why I would never buy a traditional LTC policy. Much better to use a hybrid policy.

That's kind of like hearing about a Yugo and saying to yourself, "I'll never buy any car because they all break down."
Just because Yugos sucked doesn't mean my Lexus sucks.

Fortunately, today's long-term care insurance policies have different regulations and much more accurate pricing compared to the policies sold 30+ years ago.

WoW2012
Posts: 590
Joined: Sun Dec 23, 2012 11:28 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by WoW2012 » Thu Mar 14, 2019 12:59 pm

thx1138 wrote:
Thu Mar 14, 2019 4:51 am
FBN2014 wrote:
Thu Mar 14, 2019 4:15 am
This is why I would never buy a traditional LTC policy. Much better to use a hybrid policy.
Yeah sure, because we all know making a complicated hybrid product lowers costs and is better for the consumer.

Hybrid policies are poison. The underlying LTC problem is no different than in a stand alone LTC but those problems are masked in the hybridization while as usual overall increasing costs to the consumer.
Exactly.
If someone is healthy enough to qualify for a traditional LTCi policy, it's a MUCH better value than a hybrid.
If someone is not healthy enough to qualify for a traditional LTCi policy, hybrids have much more lenient underwriting.

grok87
Posts: 8865
Joined: Tue Feb 27, 2007 9:00 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by grok87 » Fri Mar 15, 2019 5:22 am

Stinky wrote:
Thu Mar 14, 2019 9:47 am
WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
Hi,

I am sure the answer is "yes they can" but it certainly seems crazy what I am about to write and I would like any advice about anything I can do. Here is the situation:

My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986. Last year my Dad had a stroke and we were able to bring him back to recovery enough that we never filed for the nursing home insurance. So, the key point here is they have been paying since 1986 and never once collected a nickel on it.

We just received a notice that their quarterly premiums are going from $480 to almost $900! Of course, my parents are on a fixed income and that is a killer. Our choices are to let it lapse, keep the premium where it is but accept lower amounts or pay up.

It just seems like an open ended contract that when you get to the age where you are more likely to use it they jack it up so high you end up bowing out. Really ridiculous in my mind. And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.

Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.

Thank you
I expect that Allstate is well within their policy rights to increase premiums.

Most products like this are "guaranteed renewable"; that is, the insurance company can't unilaterally cancel, but can change premiums going forward with actuarial justification. In most states, the state insurance department must approve the rate increase. Rate increases must be applied to all policies in a "class", and are not based on individual claim experience.

So it's likely that the rate increase (1) is actuarially justified, and (2) has been approved by your state insurance department. No use in getting a lawyer involved. You could call or write the insurance company to ask for more details - they expect that policyholders will contact them when such a large rate increase is received.

A couple of comments / observations. First, is this the first rate increase on this policy? They've done pretty well if they've gone 30+ years at the original premium. Second, I'm a bit surprised at the large percentage increase, especially if your parents had gone 30+ years with unchanged rates. Typically, insurers prefer to have smaller and more frequent rate increases - easier to get state approval, and less adverse policyholder reactions.

Rate increases like this show why many folks distrust insurance companies.
good answer.

yes this is why i have never considered buying a LTC poicy. i don't think there are any with guaranteed fixed rates like there are for term life insurance.
RIP Mr. Bogle.

IowaFarmBoy
Posts: 718
Joined: Fri Jan 22, 2010 8:19 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by IowaFarmBoy » Fri Mar 15, 2019 6:36 am

We purchased a LTC policy a little over 10 years ago in our late 40s. It was one of the toughest financial decisions I have ever tried to sort out. It's a significant amount of money and it is a benefit that our most likely time of use would be 40-ish years down the road. There are so many unknowns when you look years into the future- how will medicine have changed, will there be innovations that make it easier to stay out of a nursing home, what is life expectancy going to be, how will my investments perform, can we just self-insure, etc. And the insurance companies have the same problems when it comes to setting rates.

In the end, I wanted something in place to reduce the risks of an early need for LTC- dementia in our 60's could derail the finances of the other spouse and I found a product that met our needs at a reasonable price. We've been through one rate increase which made me think hard about it but once I realized that I would be willing to buy the product at the new price, I renewed and moved on.

Edited to add: At this point we are happy keeping it. As we age, depending on our portfolio, premium increases, and our assessment of our needs, we may or may not keep it but it will have at least gotten us through the years where a need could be devastating.
Last edited by IowaFarmBoy on Fri Mar 15, 2019 7:48 am, edited 1 time in total.

smitcat
Posts: 4309
Joined: Mon Nov 07, 2016 10:51 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by smitcat » Fri Mar 15, 2019 7:28 am

grok87 wrote:
Fri Mar 15, 2019 5:22 am
Stinky wrote:
Thu Mar 14, 2019 9:47 am
WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
Hi,

I am sure the answer is "yes they can" but it certainly seems crazy what I am about to write and I would like any advice about anything I can do. Here is the situation:

My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986. Last year my Dad had a stroke and we were able to bring him back to recovery enough that we never filed for the nursing home insurance. So, the key point here is they have been paying since 1986 and never once collected a nickel on it.

We just received a notice that their quarterly premiums are going from $480 to almost $900! Of course, my parents are on a fixed income and that is a killer. Our choices are to let it lapse, keep the premium where it is but accept lower amounts or pay up.

It just seems like an open ended contract that when you get to the age where you are more likely to use it they jack it up so high you end up bowing out. Really ridiculous in my mind. And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.

Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.

Thank you
I expect that Allstate is well within their policy rights to increase premiums.

Most products like this are "guaranteed renewable"; that is, the insurance company can't unilaterally cancel, but can change premiums going forward with actuarial justification. In most states, the state insurance department must approve the rate increase. Rate increases must be applied to all policies in a "class", and are not based on individual claim experience.

So it's likely that the rate increase (1) is actuarially justified, and (2) has been approved by your state insurance department. No use in getting a lawyer involved. You could call or write the insurance company to ask for more details - they expect that policyholders will contact them when such a large rate increase is received.

A couple of comments / observations. First, is this the first rate increase on this policy? They've done pretty well if they've gone 30+ years at the original premium. Second, I'm a bit surprised at the large percentage increase, especially if your parents had gone 30+ years with unchanged rates. Typically, insurers prefer to have smaller and more frequent rate increases - easier to get state approval, and less adverse policyholder reactions.

Rate increases like this show why many folks distrust insurance companies.
good answer.

yes this is why i have never considered buying a LTC poicy. i don't think there are any with guaranteed fixed rates like there are for term life insurance.
For a different view I think its a bad answer.
IMO if folks distrust LTCi because of that the real problem is that they never understood what they were buying.
This statement here is also misleading...
"i don't think there are any with guaranteed fixed rates like there are for term life insurance"
LTCi typically has a given payout max and an escalator for inflation for each year. Over time both the inflation and the huge increases in healthcare costs have obviously put stress on the policies. The increases on all of these that I have seen are still 'well below' what you would expect by calculating these changes over 20-30 years.
term life on the other hand has a fixed payout which typically does not increase with inflation. So over the 20-30 years the value of the payouts actually go down and there is also no extensions guaranteed to be at a specific rate> So if you purchase the same term life policy after the last one expires you can expect a huge increase in policy cost apples to apples.

smitcat
Posts: 4309
Joined: Mon Nov 07, 2016 10:51 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by smitcat » Fri Mar 15, 2019 7:32 am

IowaFarmBoy wrote:
Fri Mar 15, 2019 6:36 am
We purchased a LTC policy a little over 10 years ago in our late 40s. It was one of the toughest financial decisions I have ever tried to sort out. It's a significant amount of money and it is a benefit that our most likely time of use would be 40-ish years down the road. There are so many unknowns when you look years into the future- how will medicine have changed, will there be innovations that make it easier to stay out of a nursing home, what is life expectancy going to be, how will my investments perform, can we just self-insure, etc. And the insurance companies have the same problems when it comes to setting rates.

In the end, I wanted something in place to reduce the risks of an early need for LTC- dementia in our 60's could derail the finances of the other spouse and I found a product that met our needs at a reasonable price. We've been through one rate increase which made me think hard about it but once I realized that I would be willing to buy the product at the new price, I renewed and moved on.
FWIW - We found the LTCi policy to be valuable in our early ages as well, not just at 60. In our case had one of us required these services while at those ages we would have been at a larger loss without the coverage. We are vary happy we have not had to claim on that we are also vey happy we have not had to claim on our life insurance, our home insurance, our disability policy, our umbrella liability , or our boat policy or are auto policy.
As we age we can eliminate some of these coverages.

User avatar
JoeRetire
Posts: 3872
Joined: Tue Jan 16, 2018 2:44 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by JoeRetire » Fri Mar 15, 2019 7:34 am

WoW2012 wrote:
Thu Mar 14, 2019 12:52 pm
Your parents have not been singled out for this rate increase. The rate increase has nothing to do with their age nor their change in health. The same increase has been requested in over 40 states on all Allstate LTCi policyholders in every age group.

Allstate sold very few long-term care insurance policies starting in the late 1980's to the mid 1990's when they started selling LTCi through their subsidiary "Lincoln Benefit Life". As of 2018, there were only 1,799 in-force "Allstate" long-term care insurance policies. This is the second rate increase on this policy series. The first rate increase was in 2010 and it was for 20%.

All of the Allstate LTCi policies were sold under the old rules. These policies, unfortunately, are not governed by the Rate Stability Regulation which is in effect in 41 states.

Your parents policy probably has a 5% compound inflation benefit and a lifetime/unlimited benefit period. It probably has a very short elimination period, too, like 20 days or less. And, because of the 5% compound inflation benefit, your parents probably have a daily benefit that is much greater than the actual cost of care in your area. Allstate is offering policyholders ways to modify the benefits to avoid the rate increase. It's called a "landing spot". I'm not privy to the specifics, but it is likely your parents could avoid the rate increase if they took advantage of one of these "landing spots". If you'd like to call Allstate and find out more about it, please share it on the forum and we can help you make a decision.
An outstanding analysis. I've said it before and I'll say it again - we are lucky to have someone so knowledgeable about LTCi on this forum. You can and do provide the details without the wild guesses. Thanks!
Don't be a lemming.

smitcat
Posts: 4309
Joined: Mon Nov 07, 2016 10:51 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by smitcat » Fri Mar 15, 2019 7:49 am

JoeRetire wrote:
Fri Mar 15, 2019 7:34 am
WoW2012 wrote:
Thu Mar 14, 2019 12:52 pm
Your parents have not been singled out for this rate increase. The rate increase has nothing to do with their age nor their change in health. The same increase has been requested in over 40 states on all Allstate LTCi policyholders in every age group.

Allstate sold very few long-term care insurance policies starting in the late 1980's to the mid 1990's when they started selling LTCi through their subsidiary "Lincoln Benefit Life". As of 2018, there were only 1,799 in-force "Allstate" long-term care insurance policies. This is the second rate increase on this policy series. The first rate increase was in 2010 and it was for 20%.

All of the Allstate LTCi policies were sold under the old rules. These policies, unfortunately, are not governed by the Rate Stability Regulation which is in effect in 41 states.

Your parents policy probably has a 5% compound inflation benefit and a lifetime/unlimited benefit period. It probably has a very short elimination period, too, like 20 days or less. And, because of the 5% compound inflation benefit, your parents probably have a daily benefit that is much greater than the actual cost of care in your area. Allstate is offering policyholders ways to modify the benefits to avoid the rate increase. It's called a "landing spot". I'm not privy to the specifics, but it is likely your parents could avoid the rate increase if they took advantage of one of these "landing spots". If you'd like to call Allstate and find out more about it, please share it on the forum and we can help you make a decision.
An outstanding analysis. I've said it before and I'll say it again - we are lucky to have someone so knowledgeable about LTCi on this forum. You can and do provide the details without the wild guesses. Thanks!
+1

TN_Boy
Posts: 1259
Joined: Sat Jan 17, 2009 12:51 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by TN_Boy » Fri Mar 15, 2019 8:45 am

Leesbro63 wrote:
Thu Mar 14, 2019 8:25 am
I think those policies were a common product of the 1980s (as seen here).
Interesting, thanks for the historical perspective. All my experience with LTC policies has been much more recent.

grandmacassie
Posts: 188
Joined: Mon Jul 14, 2014 8:50 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by grandmacassie » Fri Mar 15, 2019 9:34 am

I have a couple of observations:

About 10 years ago dear MIL was beginning to lose cognitive ability and began to complain about paying for LTC insurance "that I've never even used!" We likened it to her homeowners insurance and said "you still pay homeowners insurance and your house has never burned down and nobody's ever sued you for slip and fall!"

The next thing DH did was to phone the LTCI company and ask to be notified if she ever failed to pay the premium.

A few years later she was in an Alzheimer's nursing home unit at a cost (currently) of $404/day. Her policy pays $100/day for up to 5 years. It's an important component of her financial resource.

Premiums did not continue once benefits began.

grok87
Posts: 8865
Joined: Tue Feb 27, 2007 9:00 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by grok87 » Fri Mar 15, 2019 11:42 am

smitcat wrote:
Fri Mar 15, 2019 7:28 am
grok87 wrote:
Fri Mar 15, 2019 5:22 am
Stinky wrote:
Thu Mar 14, 2019 9:47 am
WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
Hi,

I am sure the answer is "yes they can" but it certainly seems crazy what I am about to write and I would like any advice about anything I can do. Here is the situation:

My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986. Last year my Dad had a stroke and we were able to bring him back to recovery enough that we never filed for the nursing home insurance. So, the key point here is they have been paying since 1986 and never once collected a nickel on it.

We just received a notice that their quarterly premiums are going from $480 to almost $900! Of course, my parents are on a fixed income and that is a killer. Our choices are to let it lapse, keep the premium where it is but accept lower amounts or pay up.

It just seems like an open ended contract that when you get to the age where you are more likely to use it they jack it up so high you end up bowing out. Really ridiculous in my mind. And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.

Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.

Thank you
I expect that Allstate is well within their policy rights to increase premiums.

Most products like this are "guaranteed renewable"; that is, the insurance company can't unilaterally cancel, but can change premiums going forward with actuarial justification. In most states, the state insurance department must approve the rate increase. Rate increases must be applied to all policies in a "class", and are not based on individual claim experience.

So it's likely that the rate increase (1) is actuarially justified, and (2) has been approved by your state insurance department. No use in getting a lawyer involved. You could call or write the insurance company to ask for more details - they expect that policyholders will contact them when such a large rate increase is received.

A couple of comments / observations. First, is this the first rate increase on this policy? They've done pretty well if they've gone 30+ years at the original premium. Second, I'm a bit surprised at the large percentage increase, especially if your parents had gone 30+ years with unchanged rates. Typically, insurers prefer to have smaller and more frequent rate increases - easier to get state approval, and less adverse policyholder reactions.

Rate increases like this show why many folks distrust insurance companies.
good answer.

yes this is why i have never considered buying a LTC poicy. i don't think there are any with guaranteed fixed rates like there are for term life insurance.
For a different view I think its a bad answer.
IMO if folks distrust LTCi because of that the real problem is that they never understood what they were buying.
This statement here is also misleading...
"i don't think there are any with guaranteed fixed rates like there are for term life insurance"
LTCi typically has a given payout max and an escalator for inflation for each year. Over time both the inflation and the huge increases in healthcare costs have obviously put stress on the policies. The increases on all of these that I have seen are still 'well below' what you would expect by calculating these changes over 20-30 years.
term life on the other hand has a fixed payout which typically does not increase with inflation. So over the 20-30 years the value of the payouts actually go down and there is also no extensions guaranteed to be at a specific rate> So if you purchase the same term life policy after the last one expires you can expect a huge increase in policy cost apples to apples.
well i guess i could live with a rate that was not absolutely fixed but had at least some parameters around it. sort of like some version of an adjustable rate mortgage i guess.

"The increases on all of these that I have seen are still 'well below' what you would expect by calculating these changes over 20-30 years."

that's an interesting comment. do you have a link or two you could share? i'd be interested in learning more about that...

cheers,
grok
RIP Mr. Bogle.

cashmoney
Posts: 316
Joined: Thu Jun 29, 2017 11:15 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by cashmoney » Fri Mar 15, 2019 12:16 pm

WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
Hi,

I am sure the answer is "yes they can" but it certainly seems crazy what I am about to write and I would like any advice about anything I can do. Here is the situation:

My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986. Last year my Dad had a stroke and we were able to bring him back to recovery enough that we never filed for the nursing home insurance. So, the key point here is they have been paying since 1986 and never once collected a nickel on it.

We just received a notice that their quarterly premiums are going from $480 to almost $900! Of course, my parents are on a fixed income and that is a killer. Our choices are to let it lapse, keep the premium where it is but accept lower amounts or pay up.

It just seems like an open ended contract that when you get to the age where you are more likely to use it they jack it up so high you end up bowing out. Really ridiculous in my mind. And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.

Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.

Thank you


Reasons to keep it is because its cheap compared to what they could buy at their current age if they could buy it at all but some LTC policies sold before 1995 or so can have outdated or more restrictive claim triggers.For example some old LTC policies only pay nursing home claim if person was in hospital for 3 days prior.Some older policies would give the cognitive impairment decision to the insurance company where with newer policies the doctor makes the call.Also the old policies do not have the partnership feature.

User avatar
Artful Dodger
Posts: 779
Joined: Thu Oct 20, 2016 12:56 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Artful Dodger » Fri Mar 15, 2019 12:19 pm

Leesbro63 wrote:
Thu Mar 14, 2019 8:25 am
I think those policies were a common product of the 1980s (as seen here).
Yes, this is it. My folks had a similar plan that was nursing home only. They bought it in the late 80s, and I don't think assisted living centers or home care were very common back then (or at least something you bought insurance for). It would only pay for nursing home care, and at first had a requirement you had to be in the hospital for three days before it would pay. That requirement was later removed. It all worked out in the end. Mom went into a nursing home with dementia, lasted 3 1/2 years and the policy paid well.

rgs92
Posts: 2440
Joined: Mon Mar 02, 2009 8:00 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by rgs92 » Fri Mar 15, 2019 12:50 pm

Those premium amounts, even the larger ones, are very low and a bargain. So I would definitely hold on to the policy.
Normal premiums are about $200-$500 per person per month in middle age for realistic benefits.

123
Posts: 5200
Joined: Fri Oct 12, 2012 3:55 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by 123 » Fri Mar 15, 2019 1:37 pm

What coverage/monetary benefit does the policy provide for? Did the policy provide for inflation protection? Has the policy been amended since it was issued in the 1980's?

Without knowing what benefits the policy provides it is difficult to know whether the premium is excessive or a bargain that would be foolish to abandon.
The closest helping hand is at the end of your own arm.

nun
Posts: 223
Joined: Wed Mar 12, 2008 9:51 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by nun » Fri Mar 15, 2019 1:42 pm

rgs92 wrote:
Fri Mar 15, 2019 12:50 pm
Those premium amounts, even the larger ones, are very low and a bargain. So I would definitely hold on to the policy.
Normal premiums are about $200-$500 per person per month in middle age for realistic benefits.
I'm lucky then. When I was in my late 30s I bought a MetLife plan that will pay $300/day up to a total of $360k and I pay $28/month. I'm in my late 50s now and my plan is that if I need LTC it will help pay some of the cost and as the average stay in LTC is less than 3 years the cap should be ok

smitcat
Posts: 4309
Joined: Mon Nov 07, 2016 10:51 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by smitcat » Fri Mar 15, 2019 2:57 pm

grok87 wrote:
Fri Mar 15, 2019 11:42 am
smitcat wrote:
Fri Mar 15, 2019 7:28 am
grok87 wrote:
Fri Mar 15, 2019 5:22 am
Stinky wrote:
Thu Mar 14, 2019 9:47 am
WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
Hi,

I am sure the answer is "yes they can" but it certainly seems crazy what I am about to write and I would like any advice about anything I can do. Here is the situation:

My parents are 90 (mom) and 89 (Dad). They have been paying on an Allstate "Nursing Home" policy since 1986. Last year my Dad had a stroke and we were able to bring him back to recovery enough that we never filed for the nursing home insurance. So, the key point here is they have been paying since 1986 and never once collected a nickel on it.

We just received a notice that their quarterly premiums are going from $480 to almost $900! Of course, my parents are on a fixed income and that is a killer. Our choices are to let it lapse, keep the premium where it is but accept lower amounts or pay up.

It just seems like an open ended contract that when you get to the age where you are more likely to use it they jack it up so high you end up bowing out. Really ridiculous in my mind. And, since it is "nursing home" insurance they will not pay anything for a long term care assisted living facility.. it must be a "nursing home" where most people never go.

Any thoughts on recourse? Is it worth getting a lawyer to review this? I am bit emotional (angry) about this and would like to get some thoughts.

Thank you
I expect that Allstate is well within their policy rights to increase premiums.

Most products like this are "guaranteed renewable"; that is, the insurance company can't unilaterally cancel, but can change premiums going forward with actuarial justification. In most states, the state insurance department must approve the rate increase. Rate increases must be applied to all policies in a "class", and are not based on individual claim experience.

So it's likely that the rate increase (1) is actuarially justified, and (2) has been approved by your state insurance department. No use in getting a lawyer involved. You could call or write the insurance company to ask for more details - they expect that policyholders will contact them when such a large rate increase is received.

A couple of comments / observations. First, is this the first rate increase on this policy? They've done pretty well if they've gone 30+ years at the original premium. Second, I'm a bit surprised at the large percentage increase, especially if your parents had gone 30+ years with unchanged rates. Typically, insurers prefer to have smaller and more frequent rate increases - easier to get state approval, and less adverse policyholder reactions.

Rate increases like this show why many folks distrust insurance companies.
good answer.

yes this is why i have never considered buying a LTC poicy. i don't think there are any with guaranteed fixed rates like there are for term life insurance.
For a different view I think its a bad answer.
IMO if folks distrust LTCi because of that the real problem is that they never understood what they were buying.
This statement here is also misleading...
"i don't think there are any with guaranteed fixed rates like there are for term life insurance"
LTCi typically has a given payout max and an escalator for inflation for each year. Over time both the inflation and the huge increases in healthcare costs have obviously put stress on the policies. The increases on all of these that I have seen are still 'well below' what you would expect by calculating these changes over 20-30 years.
term life on the other hand has a fixed payout which typically does not increase with inflation. So over the 20-30 years the value of the payouts actually go down and there is also no extensions guaranteed to be at a specific rate> So if you purchase the same term life policy after the last one expires you can expect a huge increase in policy cost apples to apples.
well i guess i could live with a rate that was not absolutely fixed but had at least some parameters around it. sort of like some version of an adjustable rate mortgage i guess.

"The increases on all of these that I have seen are still 'well below' what you would expect by calculating these changes over 20-30 years."

that's an interesting comment. do you have a link or two you could share? i'd be interested in learning more about that...

cheers,
grok
I don't have a link handy Grok but its pretty easy to compare.
Our LTCi policies have increased less over the full 12 years we have had them then one year of our healthcare increases over the same time.
So just look at what your healthcare , or anyone's healthcare increase has been and compare it to your LTCi / or some of these posts LTCi / or a listing of your 'favorite' LTCi products history increase in the past.

User avatar
dodecahedron
Posts: 4812
Joined: Tue Nov 12, 2013 12:28 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by dodecahedron » Fri Mar 15, 2019 4:03 pm

Very interesting discussion.

My understanding is that LTCI turned out to be much less profitable/viable/sustainable than insurers originally thought. A number of LTCI carriers have totally left the industry and others have raised their prices significantly.

The original pricing was based on a number of actuarial assumptions, at least two of which turned out to be significantly flawed. One is that insurers assumed a much higher lapse rate than they actually experienced. (In other words, they underpriced the true lifetime risk pricing on the assumption that many folks would pay in profitably during their low risk decades only to allow their policies to lapse before they reached their high risk decades.) Another is that insurers did not imagine that interest rates on the kind of safe investments they are required to maintain in their reserves would fall to the low levels we have seen in the past decade.

Here is a study by the Society of Actuaries discussing these factors:

https://docs.google.com/viewer?url=http ... roject.pdf

User avatar
munemaker
Posts: 4144
Joined: Sat Jan 18, 2014 6:14 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by munemaker » Fri Mar 15, 2019 4:09 pm

WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
We just received a notice that their quarterly premiums are going from $480 to almost $900!
Common insurance company ploy. Two relatives of mine experienced the same thing. Pay in for years and as you get older and the risk increases, they jack up the rates. Being in this position, many will cancel the policy or keep the same rate and lower the amount of coverage. This plays exactly into the insurer's hand.

The reason for any insurance is to pay the insurer to take the risk for you. Here, you are paying and taking most of the risk yourself.

That's why I won't consider LTCI.

WoW2012
Posts: 590
Joined: Sun Dec 23, 2012 11:28 am

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by WoW2012 » Fri Mar 15, 2019 4:36 pm

munemaker wrote:
Fri Mar 15, 2019 4:09 pm
WolfgangPauli wrote:
Wed Mar 13, 2019 10:55 pm
We just received a notice that their quarterly premiums are going from $480 to almost $900!
Common insurance company ploy. Two relatives of mine experienced the same thing. Pay in for years and as you get older and the risk increases, they jack up the rates. Being in this position, many will cancel the policy or keep the same rate and lower the amount of coverage. This plays exactly into the insurer's hand.

The reason for any insurance is to pay the insurer to take the risk for you. Here, you are paying and taking most of the risk yourself.

That's why I won't consider LTCI.

Fortunately the Rate Stability Regulation has stopped this "common insurance company ploy". For every policy purchased under the Rate Stability Regulation if an insurer seeks a rate increase they have to reduce their profits. There is no longer a profit incentive in rate increases for these newer policies.

Tdubs
Posts: 859
Joined: Tue Apr 24, 2018 7:50 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by Tdubs » Fri Mar 15, 2019 4:43 pm

Image

User avatar
aspirit
Posts: 478
Joined: Wed Jan 03, 2018 12:52 am
Location: SMA.SFL

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by aspirit » Fri Mar 15, 2019 4:49 pm

Tdubs wrote:
Fri Mar 15, 2019 4:43 pm
Image
:mrgreen: funny but so true.
Another feel good legislative move, like the fiduciary rule, wait was repealed w/in 1yr.
Time & tides wait for no one. A man has to know his limitations. | "Give me control of a nation's money and I care not who makes it's laws" | — Mayer Amschel Bauer Rothschild ~

grok87
Posts: 8865
Joined: Tue Feb 27, 2007 9:00 pm

Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?

Post by grok87 » Fri Mar 15, 2019 4:54 pm

smitcat wrote:
Fri Mar 15, 2019 2:57 pm
grok87 wrote:
Fri Mar 15, 2019 11:42 am
smitcat wrote:
Fri Mar 15, 2019 7:28 am
grok87 wrote:
Fri Mar 15, 2019 5:22 am
Stinky wrote:
Thu Mar 14, 2019 9:47 am


I expect that Allstate is well within their policy rights to increase premiums.

Most products like this are "guaranteed renewable"; that is, the insurance company can't unilaterally cancel, but can change premiums going forward with actuarial justification. In most states, the state insurance department must approve the rate increase. Rate increases must be applied to all policies in a "class", and are not based on individual claim experience.

So it's likely that the rate increase (1) is actuarially justified, and (2) has been approved by your state insurance department. No use in getting a lawyer involved. You could call or write the insurance company to ask for more details - they expect that policyholders will contact them when such a large rate increase is received.

A couple of comments / observations. First, is this the first rate increase on this policy? They've done pretty well if they've gone 30+ years at the original premium. Second, I'm a bit surprised at the large percentage increase, especially if your parents had gone 30+ years with unchanged rates. Typically, insurers prefer to have smaller and more frequent rate increases - easier to get state approval, and less adverse policyholder reactions.

Rate increases like this show why many folks distrust insurance companies.
good answer.

yes this is why i have never considered buying a LTC poicy. i don't think there are any with guaranteed fixed rates like there are for term life insurance.
For a different view I think its a bad answer.
IMO if folks distrust LTCi because of that the real problem is that they never understood what they were buying.
This statement here is also misleading...
"i don't think there are any with guaranteed fixed rates like there are for term life insurance"
LTCi typically has a given payout max and an escalator for inflation for each year. Over time both the inflation and the huge increases in healthcare costs have obviously put stress on the policies. The increases on all of these that I have seen are still 'well below' what you would expect by calculating these changes over 20-30 years.
term life on the other hand has a fixed payout which typically does not increase with inflation. So over the 20-30 years the value of the payouts actually go down and there is also no extensions guaranteed to be at a specific rate> So if you purchase the same term life policy after the last one expires you can expect a huge increase in policy cost apples to apples.
well i guess i could live with a rate that was not absolutely fixed but had at least some parameters around it. sort of like some version of an adjustable rate mortgage i guess.

"The increases on all of these that I have seen are still 'well below' what you would expect by calculating these changes over 20-30 years."

that's an interesting comment. do you have a link or two you could share? i'd be interested in learning more about that...

cheers,
grok
I don't have a link handy Grok but its pretty easy to compare.
Our LTCi policies have increased less over the full 12 years we have had them then one year of our healthcare increases over the same time.
So just look at what your healthcare , or anyone's healthcare increase has been and compare it to your LTCi / or some of these posts LTCi / or a listing of your 'favorite' LTCi products history increase in the past.
thanks smitcat, that does seem like a good way to look at it.
RIP Mr. Bogle.

Post Reply