DO LONG TERM CARE INSURANCE RATE INCREASES HAPPEN?
Like everything else, Long Term Care Insurance premiums are not guaranteed. Your premium cannot increase to you individually and will not change because you get older or your health changes or for any other reason related solely to you. Premiums may only increase if you are among a group on enrollees of a specific policy whose premium is determined to be inadequate and the request to increase the rates is approved by your state Department of Insurance. However there are Long Term Care companies that have NEVER increased their policies. Fill out the form below to learn more.
What is the future outlook on Long Term Care Policy increases?
No one can predict or knows what the future will bring. However, for the last decade interest rates have been at rock bottom, and unlikely to go lower. When Long Term Care policies were first sold in 1974 interest rates were higher. However in the last decade the interest rates insurers have been receiving on their bond investments have been very low. Insurance companies were counting on profits from the stock market (and the interest from bonds) to help cover their cost to satisfy insurance claims. Those profits simply haven’t materialized and as a result insurers have had to ask for rate increases.
Therefore if currently priced Long Term Care premiums take the low interest rates into consideration, it is less likely that premiums would be increased because if interest rates go up, insurance companies will have increased profit.
Also, if you choose an established, well rated company that has a long history of actuarial or claims experience, the premium increases that companies have had in the past would be less likely because they can estimate their probability of claims much more accurately. An important principal to remember is that the LTC policies are typically just paying a fixed amount each day for a fixed number of days and are not based on expenses you incur from the nursing home.
Buy from Insurance Companies that have been in business a long time and have a long history of claims.
The first Long Term Care Policy was introduced in 1974. A company that has been selling LTC policies for 20 or 30 years has a long experience with claims, and therefore, can estimate their expenses more accurately and price their policy more accurately. Whereas, buying a LTC policy from a new company on the market that doesn’t have a long history of claims and may not be able to estimate them properly is more risky.
Buy from financially strong companies
Long term care insurance companies have a right to raise rates on all of the policy holders only as a group on a specific policy, provided they receive state approval. Since even the A+ rated carriers have raised rates because virtually all of the insurance companies were not receiving income from their investments due to the low interest rates in America for the last decade, the inverse relationship between financial stability and rate increases is not as related as it once was. However, that being said, the larger, highly rated companies will typically raise rates less often and less dramatically than a lesser rated smaller company.
Please fill out the form below to even learn which Long Term Care Companies have never increased rates.
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Carriers quoted will vary from state to state.)