| When long term care insurance was first | | | | have used unethical, but not previously illegal |
| conceived and offered, back in the 1980's, most | | | | tactics. |
| LTCi premium rates were much lower than | | | | Companies sold low-priced policies to unhealthy |
| today's policies. Why have they increased so | | | | people, then sold their LTCi business claiming |
| much and why are long term care insurance | | | | financial duress due to too many claims. The |
| companies raising premiums on existing policies? | | | | original, "low-balling" company makes money while |
| Well, for one thing, many long term care | | | | the new owner of the LTCi business is left to |
| insurance polices today offer significantly more | | | | clean up the mess, and the policy holders face the |
| benefits than the old "nursing home only" policies. | | | | unenviable choice of paying increasing rates or |
| Due to consumer demand as well as consumer | | | | giving up their coverage. |
| protection laws being passed, long term care | | | | Why do I say that companies, who didn't even |
| insurance policies of today have less restrictions | | | | have proper actuarial data, could be considered |
| (As with any contract, always read the fine print!). | | | | unethical for selling low-balled policies to unhealthy |
| The more an insurance company has to pay out, | | | | people? Well, because I've spoken with truly |
| the higher the premiums with be. | | | | ethical, independent long term care insurance |
| Other reasons, besides the all too prevalent | | | | brokers who wouldn't sell those companies' |
| inflation, are that long term care insurance | | | | products unless there was no other way to insure |
| companies had no previous actuarial data to | | | | a person. Even then, they'd make sure to let their |
| crunch. For instance: How long would a person pay | | | | client know that their rates would most likely |
| before going on claim? How many would die | | | | increase in the future. These brokers could see |
| before collecting benefits? How much money | | | | what the future held, so why didn't the companies |
| would the long term care insurance company | | | | consider the future? |
| need to pay out in claims? And finally, would the | | | | The problem is that it is difficult, if not impossible, |
| company's product sales and investments provide | | | | to prove that an insurance company was aware |
| enough assets to keep them viable? | | | | of these concerns ahead of time. |
| Insurance companies didn't have past experience | | | | Luckily for the consumer, there have been |
| with long term care claims, plus competition was | | | | positive changes. Laws are being passed due to |
| stiff. As years ticked by, many companies | | | | the frequent and high rate increases. Do your |
| offered more benefits while keeping their | | | | homework. Find out exactly what your state's |
| premiums quite low. Some even sold low-priced | | | | laws are pertaining to the sale of LTCi and the |
| policies to people with health conditions that would | | | | obligations of LTCi companies to their |
| likely lead to long term care. This was a big | | | | policyholders. |
| mistake. | | | | In Arizona, companies must offer their policy |
| My mother bought a low-balled policy that was | | | | holders choices when premiums are raised. They |
| packed with benefits. She paid about $1500 a | | | | can lower the amount of their original coverage in |
| year for 5 years. After 3 year's worth of recent | | | | order to keep their premiums the same or they |
| rate increases, her premium has more than | | | | can stop paying their premiums altogether. With |
| doubled. As strokes and Alzheimers run in our | | | | the latter choice, the company creates a fund for |
| family, we're hoping that the insurance company | | | | the policy holder in the amount of the total |
| doesn't increase her premium many more times. | | | | premium payments paid to the company. That |
| Are we upset that Mom's premium has increased | | | | fund will pay for the policy holder's long term care |
| so much? Yes and no. No one likes unexpected, | | | | until the money runs out. Of course, it does not |
| unpleasant changes and certainly no one wants to | | | | take inflation into consideration. |
| pay more for insurance, but we do appreciate | | | | My mother was given those 2 options this year |
| that she has been protected against catastrophic | | | | when she received notice of (yet another) |
| long term care costs all these years, whether she | | | | premium rate increase. Since she had only paid |
| used the insurance or not. | | | | about $10,500 in premiums, which that would only |
| Now some folks would call significant rate | | | | cover a little over 3 months worth of long term |
| increases on an unsuspecting consumer fraud. But | | | | care in a skilled nursing facility, she opted to keep |
| it's not. It IS quite unfortunate, but it's not fraud. | | | | her existing policy/premium. She was lucky. She |
| If it were, the Department of Insurance in every | | | | was able to afford the higher premium even |
| state would shut the long term care insurance | | | | though she is on a fixed income. |
| companies down. | | | | BTW, a few LTCi companies have not raised their |
| Most LTCi companies simply did not have the | | | | rates. They offer very good, expensive policies, |
| foresight to charge enough money for their earlier | | | | therefore reducing the possibility of future rate |
| policies. They guessed at how much money | | | | increases. Even with laws in place; inflation, a |
| they'd need to charge and they guessed wrong. | | | | drastic increase in claims and how well a |
| They're still trying to figure out how much they | | | | company's investments fare can contribute |
| need to charge in order to maintain a healthy pool | | | | greatly to whether an LTCi company asks for |
| of money from which to pay claims, while still | | | | rate increases or even remains viable. |
| remaining competitive. The playing field keeps | | | | Check your State's Department of Insurance to |
| changing. Not the least of their problems is the | | | | find out which companies have raised rates and |
| rate of inflation in the long term care sector. LTCi | | | | also to see if any complaints have been made |
| companies have to pay out more money for | | | | against a particular insurance company or agent. |
| equivalent care every year. | | | | Check with the services like Weiss Research, |
| That's the insurance companies' point of view. But | | | | Standard & Poor's, Moody's, AM Best and Duff & |
| there are two sides to any story. | | | | Phelps to research the financial status of any long |
| It does appear that some LTCi companies may | | | | term care insurance company. |