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Taxation & Estate Planning: New Jersey Estate & Elder Planning Blog
Long Term Care Insurance Premiums on the Rise
By Deirdre R. Wheatley-Liss, Esq.
Just like in the mortgage market where making mortgages too cheap in years past is making them more expensive today, the Long Term Care insurance market is in the midst of an upward adjustment. While many people may think that Long Term Care insurance is expensive, having to pay out of pocket for long term care is much more so ($100k - $120k a year is not unusual in northern NJ). When insurance companies began underwriting Long Term Care Insurance policies 10-15 years ago, they didn't have a great pool of actuarial data to set the premiums. And unlike life insurance, where there is a fixed cost to the insurance company (the set death benefit), there is no known fixed cost to Long Term Care. Add to that the fact that insurance companies are in business to make money for their shareholders, it should come as no surprise that Long Term Care insurance premiums are on the rise.
What has come as a surprise to some people, however, is that even "guaranteed fixed premiums" are subject to change if the insurance company goes back to the banking and insurance commission of the state to show that all their underwriting assumptions were wrong. This can lead to either an unanticipated increase in premiums (hard to swallow on a fixed income), or a reduction in scheduled benefits.
What should you do? If you have Long Term Care insurance, call your insurance company and ask for a current benefits statement. Check that against your original policy so you can speak to the issuing agent about any discrepancies. If you don't yet have Long Term Care insurance, the price is only going to go up as you get older and the insurance companies readjust their prices.
For more, see Long-Term Care Insurance Giant Raises Premiums on Existing Customers for First Time at elderlawanswers.com.
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