Massive Increase in Long Term Care Insurance for My Parents - Can They?
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Massive Increase in Long Term Care Insurance for My Parents - Can They?
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 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
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Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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?
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.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
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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
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Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
$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.
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Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.Dottie57 wrote: ↑Thu Mar 14, 2019 12:17 amPretty 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.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
It's a slight tangent, but how common are "skilled nursing only" LTC plans? I would definitely counsel against buying such a policy.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.TN_Boy wrote: ↑Thu Mar 14, 2019 8:17 amThe 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.Dottie57 wrote: ↑Thu Mar 14, 2019 12:17 amPretty 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.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
It's a slight tangent, but how common are "skilled nursing only" LTC plans? I would definitely counsel against buying such a policy.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
I think those policies were a common product of the 1980s (as seen here).
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Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
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Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
I expect that Allstate is well within their policy rights to increase premiums.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
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.
Retired life insurance company financial executive who sincerely believes that ”It’s a GREAT day to be alive!”
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
This is confusing.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.
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?
You would probably be better off talking to Allstate, rather than a lawyer. It certainly would be cheaper.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.
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.
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Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.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.
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Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.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
2. If there has been no increase since 1986 your parents have been very very fortunate.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.Leesbro63 wrote: ↑Thu Mar 14, 2019 9:59 amI 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.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.
Last edited by Leesbro63 on Thu Mar 14, 2019 10:44 am, edited 1 time in total.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.JoeRetire wrote: ↑Thu Mar 14, 2019 9:57 amThis is confusing.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.
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?
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
Exactly.thx1138 wrote: ↑Thu Mar 14, 2019 4:51 amYeah 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.
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
good answer.Stinky wrote: ↑Thu Mar 14, 2019 9:47 amI expect that Allstate is well within their policy rights to increase premiums.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
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.
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.
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Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
For a different view I think its a bad answer.grok87 wrote: ↑Fri Mar 15, 2019 5:22 amgood answer.Stinky wrote: ↑Thu Mar 14, 2019 9:47 amI expect that Allstate is well within their policy rights to increase premiums.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
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.
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.
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.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.
As we age we can eliminate some of these coverages.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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!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.
This isn't just my wallet. It's an organizer, a memory and an old friend.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
+1JoeRetire wrote: ↑Fri Mar 15, 2019 7:34 amAn 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!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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.smitcat wrote: ↑Fri Mar 15, 2019 7:28 amFor a different view I think its a bad answer.grok87 wrote: ↑Fri Mar 15, 2019 5:22 amgood answer.Stinky wrote: ↑Thu Mar 14, 2019 9:47 amI expect that Allstate is well within their policy rights to increase premiums.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
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.
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.
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.
"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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
- Artful Dodger
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Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
Normal premiums are about $200-$500 per person per month in middle age for realistic benefits.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
I don't have a link handy Grok but its pretty easy to compare.grok87 wrote: ↑Fri Mar 15, 2019 11:42 amwell 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.smitcat wrote: ↑Fri Mar 15, 2019 7:28 amFor a different view I think its a bad answer.grok87 wrote: ↑Fri Mar 15, 2019 5:22 amgood answer.Stinky wrote: ↑Thu Mar 14, 2019 9:47 amI expect that Allstate is well within their policy rights to increase premiums.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
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.
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.
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.
"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
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.
- dodecahedron
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- Joined: Tue Nov 12, 2013 11:28 am
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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
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
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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.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!
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
munemaker wrote: ↑Fri Mar 15, 2019 4:09 pmCommon 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.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!
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.
Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
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" |
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Re: Massive Increase in Long Term Care Insurance for My Parents - Can They?
thanks smitcat, that does seem like a good way to look at it.smitcat wrote: ↑Fri Mar 15, 2019 2:57 pmI don't have a link handy Grok but its pretty easy to compare.grok87 wrote: ↑Fri Mar 15, 2019 11:42 amwell 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.smitcat wrote: ↑Fri Mar 15, 2019 7:28 amFor a different view I think its a bad answer.grok87 wrote: ↑Fri Mar 15, 2019 5:22 amgood answer.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.
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.
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.
"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
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.
RIP Mr. Bogle.