I Just Got a Rate Increase on my Long Term Care Insurance Policy

            It’s a call we are getting with increasing frequency.  Jim just received a letter from his long term care insurance company that they are increasing his premium by a whopping 60%.  If that’s not bad enough, the letter warns that he should expect further increases in future years.

            Jim is 71 years old and healthy.  While he doesn’t have a crystal ball to look into the future, he is currently healthy and has no idea if or when he’ll need long term care.  How many rate increases could he face – and will he be able to afford them – before he ever starts to receive benefits under the policy?

            The letter Jim received gives him options.  One of course is to pay the 60% rate increase and keep his benefits the way they are.  A second option is to reduce his daily benefit – the amount paid per day for care – or to reduce or eliminate the inflation protection that raises the daily benefit each year to keep pace with the rising cost of care.  A third option is to keep a more limited benefit for long term care.  In that case Jim does not have to make any more premium payments.

      Jim is unsure of what to do.  He’s not even sure he understands each option to be able to make an informed decision.  Next week I’ll explain the options and give you the pros and cons of each.