There are many factors that force a carrier to seek rate increases. Here are just a few:

Poor investment performance over long periods of time.

Every insurance Carrier uses premiums in a variety of ways and the premium investments help to keep growing the premiums to pay claims and keep the Carrier solvent. Every Carrier depends on a mixture of investments to keep the cycle going on a very large scale – it’s this cycle that pays for millions of dollars of claims every day. However, for the last decade or so, investments have performed at less than expected rates which leaves a deficit between the expected backing and the competitively priced premiums at initial purchase.

More claims are filed than originally anticipated.

People realize the value of their pennies-on-the-dollar coverage and more people than originally expected are keeping their policies. Insurers priced premiums for the rates of claims and policy retention at the time they sold the product, but time has brought a larger payout across the board than originally anticipated leaving a gap in premiums that must be matched to keep paying claims.

Carriers pulling out of the new policy market.

Rather than going back to their current customers for more premium, most Carriers rolled out new products with higher premium rates. This brought in more premiums to meet the larger claims in the pool of policies. However, some Carriers have stopped selling new products. Without the newer products, there is another premium gap that must be met to continue paying claims.

Poor investment performance over long periods of time.

When you purchase your policy, you purchased it at a particular age. That age is locked in to your rates; your rates should not increase due to your age unless you chose a rider (such as an inflation protection rider) that increases the policy benefit and premiums periodically. Long term care insurance contracts do allow the Carriers the right to raise rates on blocks of business – particular products sold during certain years in certain states, but not just on individuals of a particular age group.

The insurance laws in most states ensure that large proposed increases will be evaluated by experts to make sure they are based on reasonable cost assumptions and solid evidence.

You could look, but your findings may surprise you. Newer products come at higher rates and often don’t have the feature-rich options common to earlier products. Additionally, your current age will be a factor. If you are paying rates with your current coverage that you bought when you were 40, you’re paying the age 40 rates from when you bought it. If it has been 15 years since you purchased the coverage, any coverage you look at now will also come at a premium for a 55 year old, which is a significant difference.

If you pursue a new Long term care policy, do not cancel your current coverage until approval for the new policy is received.

Our specialists can review your current policy with you and compare benefits with what is now available on the market.

In the event of a rate increase, you will be offered options for you to consider in order to avoid paying the increase. You can make benefit changes to keep premiums at or close to the original premium. Note: Insurance carriers are typically able to cancel a Long term care policy provided premiums are paid in accordance with policy terms.

Your deadline is often your policy’s anniversary. Check the mailing you’ve received to see when your decision has to be made. If you are deciding to keep your coverage as-is, simply pay the increased premium amount when your bill comes in. If you are changing your policy to reduce your premium, it’s necessary to allow the carrier enough time to process your changes.

Once your changes are complete, you should receive a new set of “Schedule Pages” (pages listing your benefits and corresponding premiums). These typically come out a few weeks after the changes are processed.

Some Carriers have had more than one rate increase. It depends on the factors discussed earlier. It is best to continue to research and make decisions that are suitable to your own situation.