Insurance companies go through a complicated process of analyzing claim data, future claim data, interest rates, future risks, and many other factors before implementing rate increases. It is important to understand that rate increases are not a sign of a “bad” policy or carrier, and the lack of rate increases is not a sign of a “good” policy or carrier.
What can cause a rate increase
A common misconception is that premium increases are due to changes in the policy holder’s age, health or claims history- this is not true. Insurance companies see if a rate increase is warranted based on actuarial projections of future claims cost. Long term care insurance companies only raise rates to groups of policies with similar characteristics that are issued in the same state on the same policy form.
What’s being done today to protect against rising rates
According to the National Association of Insurance Commissioners, the long term care market has evolved significantly since it was first introduced in the 1960s. With early long term care products, insurers underestimated how long people would be living and how many people would drop coverage before receiving benefits- this lead to having to raise rates on policies that were issued. Long term care insurance purchasers should feel comfortable that today’s plans have progressed due to a combination of new pricing methods and smart regulations which will help keep plan premiums stable.
Today’s policies are priced more accurately than in the past. Insurers now have more information about the actual cost of claims and they have adjusted their projections and pricing accordingly. State insurance regulators are working to pass projections related to changes in product design to address previous issues with earlier products, mortality risk, and longevity risk being the two major variables. However, when you buy a long term care policy, there is no guarantee that the premium will stay the same forever.
The benefits of a long term care insurance policy are significant and today’s long term care insurance policies can be tailored to fit your budget as well as your needs. However, if you are an owner of an older policy don’t make a hasty decision if you see a premium increase. Speak with a certified long term care specialist at Affordable Long Term Care to discuss options you have available.
To learn more about long term care for your specific situation, consult with our professionals at Affordable Long Term Care today by following this link. You can also follow us on Facebook or LinkedIn to receive company updates!