Changing Face of Long Term Care Insurance

There have been a lot of changes in Long Term Care insurance in recent years.  Here are some things you should be aware of:

1.  Many companies that were in the business of selling LTCI aren't anymore.  When the LTCI first hit the market, companies jumped in with no actuarial claims history.  Many policies offered "lifetime benefits", but with people living longer, claims went up.  As a result, carriers either sold their books of business or stopped selling the policies but continued to service them.

2.  Companies reserve the right to raise the rate on a policy after issue.  In other words, if you were forward thinking enough to purchase a policy when you were younger (and reasonably thought it would be less expensive), you could have seen your premiums increase.  This happened often after the market dropped in 2008 because the companies' reserves (where they keep the money to pay claims) was invested in the stock market.  Some companies have gone through a second round of rate increases again in the last year or so.

3.  Newer policies have been stripped of benefits.  The previously mentioned "lifetime benefit" is gone from nearly all policies, as are many other benefits.  Again, rising costs are the culprit.

4.  Companies have started offering LTCI benefits inside permanent life insurance policies or as riders to life policies.  This makes the most sense if you are younger, because you don't have to worry about rate increases (see #2) and the policy can actually do 3 things:  be life insurance for your family if you die, offer LTCI benefits if you become chronically ill, or act as a retirement supplement if you want.

Long Term Care insurance should be part of a holistic retirement plan.  Contact us for more information at Surf Financial Brokers.