My Premium Is Being Raised, Why and What Can I Do?

A recent Wall Street Journal article details some of the price increases that have occurred on people’s Long Term Care insurance (LTCi) policies.  Price increases happen on many things over the years, but let me explain what is happening in this industry.

My LTCi policy has been in force for 12 years now.  I have paid in about $18,000 in premiums and if I need 4 years of care starting now, I will collect over $388,000.  If I need that same amount of care in 20 years from now I will collect over 1 million dollars (not counting the 5% increase in what they pay me each year while on claim).  That’s a pretty good deal.  It’s not expensive, sure it is a large premium, but it is actually cheap compared to the cost of care or what it will save me.

This is still a young industry, but one that has evolved quickly.  Many of the early policies sold were sold to people they should not have offered them to, and at prices that were too low.  They learned.  Then the industry realized their assumption that like life insurance, some people would drop their policies over time and never have to pay claims on them was wrong.  DUH!  The older, and stiffer, and fatter I get, the more I realize I am happy I have this policy.

One of the companies mentioned prominently in the article was in the past my “go to” company for people with diabetes.  If you have diabetes you are 65% more likely to develop Alzheimer’s disease.  Yes, I sold this company’s policies, but only to diabetics who could not get coverage anywhere else.  (They won’t touch a diabetic now anymore – they learned) Get your coverage while young and healthy enough to be able to get it!

This is just one of the reasons to investigate LTCi with an expert in this area, not someone dabbling in it.  You wouldn’t go to a dentist for a root canal if he/she mentioned it was the first one and they always wanted to give it a try.

You may have noticed that interest rates are very low today.  The insurance industry as a whole is earning only 3.2% on their assets.  Yet LTCi policies automatically increase your benefits by 5% compound every year.  Insurance companies are going backwards right now.  Thankfully they have billions and trillions in reserve, but they are hoping, just like you, that interest rates will rise a bit and take the pressure off.  And they are still paying claims every day.

Perhaps one might just let the government pay for their LTC.  Good luck with that.  How much do they have in reserve?  How much is in the Social Security bank account (average benefit about $1100/month)?  Is Medicare any better?  A nursing home costs $8000 a month or more in Wisconsin, why would you depend on Medicaid, which requires impoverishment, when for just a fraction of your nest egg you can have insurance to let you go where you want when care is needed?

The insurance industry does not have a perfectly clear crystal ball, nobody does.  But, it is the best thing we have.  It is better than impoverishment and dependence on government welfare by a long shot.  If your premium has gone up, call me and let’s see what we can do to mitigate the increase, there are numerous options.  I can help you choose which one is best for you.

In the meantime I will continue to pay my premium for my LTCi.  I will continue to pay for my car and home insurance even as they go up as well.  I am glad I have to protection and choices for where and how I will be cared for.  Romeo Raabe, (920) 884-3030 or (800)-219-9203

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