You know the old saying, “If I had a dime for every time I’ve heard someone say that I’d be rich!” It seems like we hear this lot and the truth is, things have changed. There have been problems with rate increases for people with existing policies but most of those clients have plans with insurance companies who no longer accept new clients. This means the insurance company can only generate revenue from existing clients to pay their increasing expenses as their clients’ age and go on claim.
Although this has been a problem for many people, it does not mean it is going to be an issue moving forward for those people who are putting a new plan in place. In fact, a recent report from the insurance industry suggests due to having more data available (see Big Data article), insurance companies can now price their plans with more certainty which has lowered the risk of a future rate increase to about 10%. And remember, 40% of the traditional plans we offer today have never had a price increase of existing clients.
Additionally, work from the National Association of Insurance Commissioners has also helped bring pricing transparency and limit the risk of future rate increases. The number of companies who offer traditional long-term care insurance has been reduced by nearly 90% leaving us with some very committed carriers who have gone to great efforts to offer stable secure plans for their new clients as they understand how important this is moving forward.
Also, new programs like the Hybrid based long-term care plans are contractual and have guaranteed level premiums and will pay you back if you never use them. So don’t listen to the uneducated advice that premiums will increase. We now have more options and more ways to fund long-term care plans and many of them guarantee you will never see a premium increase.