long-term care premium
 

Big increase in long-term care premium - more than 10%. I've been paying it so long, I can't stop now

Which company?

Be thankful it's only 10%. I have had a LTC policy for 10 years (started it when I was 56) and I just received notice that the premium is going up 72%!!! I am still in shock. What happened to their promise " if you buy it when you are younger, you will have lower premiums"? Mine is John Hancock.

They are hoping to get enough in premiums to pay for your services when you need it!

Mine is John Hancock also and I was told the same thing. I don't know if I'll ever even use the bloody thing.

Just curious, what are your premiums? Ours are about $1200yr for both of us. $800 for me and $400 for her. Been that way for 10 yrs.

My premium is $1,908 per year and increasing to $3,300 per year. It currently has a daily benefit of $225 per day ($82,125 annual) which just happens to be the average cost of nursing home care in Florida. So, any option except paying the higher cost would result in inadequate coverage. And who is to say the premium won't increase again in future years. There is no cap. Hindsight is eye opening.

You might look into lowering your inflation protection (if you have it). If you have 5%compound, lower it to 3% compound, or 5% simple. If you have a policy with lifetime protection, lower it to 3-5 years of coverage. (If you have Alzheimers in your family, you might want it longer). Both these reductions will still offer you good coverage, and will lower your premium.
I have been selling LTCI for over 12 years, and I'm upset that Hancock has been allowed such increases (it's actually 44%) by the state of Florida.

Wow.... We also have LTC insurance with John Hancock, and also for about ten years. We've never had a premium change in that time, and our most recent renewal was the past July. I too thought the premium was chiseled in stone for life once the application was approved. Afraid even to speculate what July 2013 will bring....

Our John Hancock LTC premiums went up 40% at the fourth anniversary. We paid it rather than take a reduction in inflation protection.

Holy cow! I wonder how we've managed to avoid this in the ten years that we've had this coverage ... at least till now....

Why rates are increasing:
 

To find out why rates are increasing, try this Yahoo search: "Insurers Are Getting Out Of Long Term Care -- Is It Time For You To Get In?"

In a nut shell, this is it: John Hancock and others are trying to get out of long term care because it's not profitable. Reasons: 1) low interest rates and 2) too many people need and use the benefit.

It seems that people are being kept alive longer in poor health. I guess you could call it, "the miracle(?) of modern medicine". This, in my opinion, is what happens when people rely on "modern medicine" rather than practicing healthy lifestyle habits. It's good for the health care industry but not good for the insurance industry and not good for customers who have to pay high premiums.

dstege gives you some good potential remedies. I too was chartered financial consultant, in the insurance business in a management capacity for many years, and my advice was and is to consider lowering the daily benefit. You are paying for a benefit that would pay 100% of the nursing home cost. Instead, you should consider what your current or alternatively, your retirement cost of living is or will be. For example, if you are or will spend (and have sufficient income to cover) $50,000 per year, you don't need to indemnify the whole anticipated cost of $82,125. You should consider cutting your benefit down to $32,125 or slightly more if you want a cushion (cut it in half to $41,000 for example. Your social security, pension benefits, or other passive income will not go away if you are confined to a nursing home, and there is little reason to have excess income at that point. For those who are married, you may need to keep the benefit at a higher level so that your spouse would have money to live on if they were living and in good health if you were confined to a facility - you may benefit from a consultation with an eldercare attorney.

I feared this would come twenty-five years ago when insurers first began to offer LTC insurance. The fact is a lot of companies jumped in with premiums that were competetive in order to carve out a market niche. If they priced the product conservatively they would not be competetive, and thus would lose the business to those companies pricing it optimistically) The actuarial assumptions used in the pricing models were really educated guesses. The product was new and no one really knew what the future held concerning the nursing home costs (which have inflated faster than the general COL), or the utilization patterns. In some ways LTC insurance carries what insurers call a utilization bias or anti-selection, in other words those that have the insurance are more likely to use it than the public in general (people without it might tend to try and stay on their own or use spouse, family or friends to provide care, where those with it or their family, may more quickly opt for the facility). The insurers ace in the hole was a clause in most policies allowing them to raise premiums on a "class" basis - in other words they cannot raise your premium individually, but may raise premiums for everyone who bought that series of policy.

I think this is a good summary of the problem and for the under priced policies the price has to increase.