Managing a Long Term Care Insurance Rate Increase

It’s something no one looks forward to, but every one should be prepared for, and I’m not talking about long term care itself (although that applies, too). Premium rates on Long Term Care Insurance policies can go up and it’s up to the consumer to plan for this potential change and hedge their risk of rate increases as much as possible by buying from a good company.

Rate Increases

Long Term Care Insurance can offer some extraordinarily valuable benefits to policyholders who are looking to protect their assets and set up a plan for long term care. Like most other insurance, though, the premiums you pay can increase based on actuarial estimates and profit projections, which means the companies can raise insurance rates at any time if they meet approval from the state insurance departments.

Because many Long Term Care Insurance providers missed the mark on their estimates during the last few years, rate increases have become more common. Several big carriers have applied for in force rate increases on older policies that are no longer profitable due to estimates that were way off target. Morbidity and mortality are much harder to predict than anyone thought, and the low interest rate environment is something no one was prepared for, either, so in order to remain solvent, companies have had to seek rate increases on certain policies.

Recognizing Value

Even when the rates go up, though, most people are keeping their policy, and it’s not hard to see why. According to the CEO of Genworth Financial, a Long Term Care Insurance provider who has recently filed for several in force rate increases on older policies, more than three-quarters of policyholders are accepting the full rate increase. 83% have opted to absorb the premium hike and hold onto their original coverage, 12% opted to reduce their benefits, thereby paying a lower premium rate, and 5% have let their policy lapse in response to the rate increase. When you consider the basic value of the policy, it makes sense why most people aren’t willing to let go of it.

Let’s consider a policyholder who buys an average Long Term Care Insurance policy, which includes a 3 year benefit period, a 90 day elimination period, and a daily benefit amount of $150. Upon purchasing their plan, that individual automatically has a pool of wealth worth $164,250 to use for long term care once the elimination period is up. If they bought Inflation Protection, the value of their benefits continue to grow every year, meaning that policy will be worth thousands more down the road. Premium rates don’t come close to equaling the total value of the policy, so when you look at the numbers, it’s easy to see why so many people would opt to keep their policy. On top of the sheer monetary value of a basic policy, a large number of people with older policies have unlimited benefit periods, which includes benefits of an immeasurable value. Long Term Care Insurance policies with unlimited or lifetime benefit periods are no longer available any more for that very reason.

Planning Ahead

Long Term Care Insurance rate increases obviously aren’t what anybody wants, but there is always the chance that they might happen and it pays to be prepared. Taking the time to do your research when buying can make a big difference in the chance that your rates might increase, too. Always take a look at the financial ratings of a company and their rate increase history to get a better idea of whether or not rate increases are a common occurrence. Buying from a large, bluechip company can help reduce the chance that you will receive a huge rate hike and will also help increase the chance that your claim will be paid when the time comes for care.

Read more about shopping for Long Term Care Insurance here or if you are interested in the cost of a policy, fill out this form to request a quote and we will be in touch with you shortly

Protect Your Assets with a Texas Long Term Care Insurance Partnership Plan

The last thing any one wants is to outspend their life savings; that’s why most of us spend so much time planning our retirement to the tee. When the need for long-term care strikes, many people aren’t prepared.

Why Plan for Long Term Care?

Planning for long term care is something that is often left out of retirement plans, either due to a lack of awareness or because the risk seems too far fetched. Unfortunately, it’s not that far fetched at all.

The risk that any American will need long term care is about 50%, and that gets bumped up to 70% once you reach age 65. Compare that to the risk of getting in a car accident, which is 1 in 240, according to a study done by the National Academy of Elder Law Attorneys, or the risk of experiencing a house fire, which is 1 in 1,200, the risk of long term care is extraordinarily high.

So given that the chances are so high, how do you protect yourself from this risk? Assuming you have assets that you would like to shield from the cost of health care during retirement, Long Term Care Insurance can provide a solution.

What is Long Term Care Insurance?

Long Term Care Insurance provides coverage for care received in a long term care setting. That can include a nursing home, assisted living facility, in-home care, and other settings like adult day care, as well. Care in these facilities can be extremely costly and can reach up to $100,000 a year.

Without insurance, you will either have to pay out of pocket, forgo facility care for care provided by a family member, or spend down your assets to qualify for Medicaid. None of those three options are ideal for anyone; they include financial and emotional stress, while Long Term Care Insurance often helps you avoid this type of problem.

Texas, like most states in the US, has a Long Term Care Insurance Partnership Program to help address the growing need for long term care. On top of your typical Long Term Care Insurance policy, with the Partnership Plan, you are also eligible for another benefit: a Medicaid spend down waiver. What this means is that if you exhaust all of your benefits from your policy and still need care, you won’t be forced to spend all of your assets to qualify for Medicaid.

How Does the Partnership Program Help?

These programs exist to encourage personal responsibility amongst state residents and reduce the burden on the state. If more people purchase Long Term Care Insurance Partnership Plans, that is a significantly lesser amount that the state will be forced to pay for people’s care. It also helps ensure you won’t be stuck between a rock and a hard place when it comes to paying for care, because you will have established a solid plan.

To find out more about the Texas Long Term Care Insurance Partnership Program, visit the website. If you would like to learn more about how Long Term Care Insurance can help, read our post here.

To get a long term care insurance quote comparison from the top companies in Texas, fill out this form and we will be in touch with you shortly to send you your free quote in the mail.

A Position of Leadership Within the Long Term Care Insurance Industry

As the Long Term Care Insurance goes through some changes in the next few years, just as it has for the past few years, it’s important to have leaders within the industry to help forge the optimal path for consumers and providers.

Genworth Financial is currently taking up that role and looking to help any one interested in Long Term Care Insurance get educated and become aware of their options to help plan for the future.

Educating About the Risk

Long Term Care Insurance is a great tool for any one looking to enhance their retirement portfolio and protect their hard-earned assets from the potentially devastating and constantly increasing cost of long term care.

This type of insurance is often not considered until it’s too late, and as the need for long term care grows, it becomes apparent that a great deal more people could benefit from these policies if only they knew about them when they were younger and able to buy.

President and CEO Tom McInerney has been speaking out about Genworth’s new approach to Long Term Care Insurance and the carrier’s recently revealed 3 part strategy to help manage policies better in the future. He seems enthusiastic about the future of the company within this specific market and touts Genworth as a helpful resource for regulators, consumers, and public policymakers.

Years of Experience

Genworth has been in the Long Term Care Insurance industry since it began in the early 70s and as McInerney put it, no one in the industry knows Long Term Care Insurance as well as Genworth does. The provider has insured more than 1 million clients and paid out more than 190,000 claims, which has totaled nearly $10 billion in paid benefits.

The carrier publishes a Cost of Care Report annually, which details the growing cost of long term care and helps put into perspective just how expensive it can really be and how common the need for care is. McInerney says he wants Genworth to make Long Term Care Insurance a better and more relevant industry so more individuals can finance their long term care needs and protect their retirement nest egg.

Learn more about planning for long term care or request a free personalized quote comparison of the top providers today.