How does the pricing work?
Need versus Cost
There are two components in selecting the right policy:
- The benefits we want when we are sick
- The cost of the premium we are willing to pay
Actuaries for the insurance companies assess the risks they will undertake when considering insuring a prospective client. The older you are, the higher the risk you will activate a claim earlier than a younger person.
It pays to purchase early
Premiums are based on your age and the benefit variables you select. The longer you wait or postpone purchase, the more you will pay for the same benefits. While the average 40-59 year-old may be able to acquire a policy at reasonable premium rates, applicants over 60 usually compromise on the benefit richness of the policy to achieve an affordable premium.
More importantly, we never know when any type of health issue may arise. This may either substantially raise the cost of the policy or cause you to become entirely uninsurable.
Will my premiums ever go up?
This is an area of some misunderstanding with many consumers. Most long-term care policies are Guaranteed Renewable, meaning that as long as you pay your premiums, the insurance company can never cancel the policy. The laws governing long-term care insurance prohibit an insurance company from raising rates on individual policyholders. You can’t be singled out for a rate increase if you were to go on claim numerous times or for any other reason that might increase your risk for a future claim.
This does not guarantee your premiums will never increase. Under special circumstances the insurance company can petition for a rate adjustment to the Insurance Department for everyone in that group of policyholders.
Fortunately, many major LTC insurance companies have never raised their rates on their existing policyholders. At LTCIS we offer our clients companies with the best track record of stable rates. We especially suggest companies that have not had a rate adjustments in their history.
We give you the benefit of our personal experience regarding how a company performs during the claims process, their administration, and the ease (or not) of doing business with them.
Can I get a guaranteed premium or paid-up option?
Yes, there are still options available that guarantee a fixed premium or a paid-up policy after a specified period. For younger purchasers and/or business owners this is a more expensive option. Some of these options might include: 10 pay options, paid-up at age 65, or single-pay options. Due to the complexities and appropriate application of these options, a detailed discussion is necessary.
