Long-term care rate hike looms

Policy holders were stunned when John Hancock insurance company announced in September that it will be an average of 40% of the requirements of national regulatory authorities permit, many long-term care policies to boost premiums. For many of the insured, the proposed rate hike would come in 2008 increased above 13-18% on.

Then in October, Genworth, another major player in the field of long-term care, announced that it would request rate increased by 18% for most policyholders who in 1994 and 2001 insurance between (or in a few states, from 1994 to 2004), affecting about a quarter of the insured. MetLife, another industry giant, announced in November, it will no longer sell new individual or group long-term care insurance, but will continue to serve EXIS Ting.

Almost every long-term care insurer has to raise interest rates at least once, and many of them are in their second round of price increases. Northwestern Mutual is a rare exception. Although the company has been charging higher interest rates on long-term care insurance than its competitors, it does not raise interest rates, and even given some money back in the form of annual dividends to policyholders.

Now many consumers who have dutifully paid the proposed hike in long-term care insurance wondering if they can afford it, some ask whether the project is worth a higher price. Read on to find some of the most common questions about the proposed increase interest rates.

Why do insurance companies to raise interest rates? a John Hancock found ŧ cap the number of claims, claims of length and efficiency in the use from 2090 to 2010 the company had expected to be much higher than that – especially the aging of the population provides lifelong benefits have increasingly long open-life costs.

“The requirements of our old policy of lifetime coverage than our original policy assumptions higher,” Marianne Harrison, John Hancock, president of long-term care. “This will not be a viable product, if we do not have enough money to pay claims in the long term.” (John Hancock stop selling new policies lifelong interest in June 2010.)

Genworth said it needs to raise interest rates, because more and more people have maintained their policy of force than the company originally expected. “ITheir expected price ŧ HESE policies have a greater number of them fail, “Beth Ludden, senior vice president of product development for the Genworth said, ‘more and more people claiming benefits beyond our expectations.’

Whose interest rates will rise? John Hancock policyholders, increased size will depend on your age when you buy the policy policy, increase applies to individuals and groups but it will not affect the long-term care policy from the John Hancock federal employees, which has been John Hancock gram of the rise of interest rates in 2010 rose to a premium of 25% will not apply to the forefront of care or customize II enhanced policy – it’s two new products, issued after the adjustment required by more stringent set rate.

It is a done deal? the new prices will go into effect? ​​ Insurance companies need in most countries before regulatory approval, the premium rate to take effect. in the past, large long-term care insurance without too much trouble hike approved because regulators believe that the increase is necessary to ensure that insurance companies have enough money to pay claims. 12 3 However, this may be difficult to get approval to raise interest rates at this time. “I think a lot of managers doubt it,” Bonnie Burns, California advocating health policy experts said. “They want the company to prove things are as bad as they say they are and why they do not know it earlier. ”

If the regulatory authorities not to approve the overall growth, they can. Or, they can completely reject the proposed hike in their recognition of the increased stage partial booster or direct insurance companies.” We expect this will be a process of several years, we have reason to increase with the United States, and they will be asked to approve all rate changes paperwork, “Genworth’s Ludden said policyholders will be notified before their interest rates, but will not occur until early 2011 or later version

What are my options

You have three choices:? let the power of your policy, pay a higher premium, reduce your coverage to reduce your costs, or give up your policy. you should stick to their current policy, if you can afford it. “when the insurance company realized it needed a rate increase, the company will love veryExisting policies to reduce or abandon got better things on their cover, “Marilee Driscoll, from Plymouth, Mass long-term care planning experts say that insurance companies get off the hook a potentially costly claims.

If you can not pay higher premiums, you can change your policies, by reducing the benefit period, adjusting the daily or monthly benefit amount, waiting period before benefits kick extend or alter the inflation protection to reduce costs. If Burns said, your own life covers long-term care insurance, facing premium growth, reducing the benefit period to three years or five years, it may be significant savings on premiums. it will still cover most of the needs of long-term -care, because for the fo R less than three years the average claim.

I can switch to a lower pricing policy?

If you are healthy, over the past few years to buy a policy, it might be worth shopping around. View of the American Association for long Term care Insurance consumer information Center to find a local agent and / or request a rate quote but remember, there is no To ensure that the new policy will not increase future interest rates. And this is impossible, you are grown up you will find a better deal. Premiums based on your age. “Every year, you wait in the purchase time insurance premiums can be higher up to 5-12%, “Julie Gelbwaks Gewirtz, in plantation, Florida, coupled with long-term care broker, new policies, which comply with strict rules have to say, more expensive issue than in the past decade.

Gewirtz run number proposed based on John Hancock increased several customers. For example, a man in Florida who bought eight years ago strategies, when he was 59 years old, had been paid $ 1,657 per year to $ 130 daily benefit, 5% per year, he has a five-year benefit period. If the proposed 40 per cent hike was approved, his premiums will increase to $ 2,320 per year, but if he is he the current 67-year-old to buy a $ 170 daily benefit from the new policy (what his current policy is worth now), it will cost him $ 6,473 per year – almost three times the number of his old policy of raising interest rates and recommendations. This Assume that he is healthy enough to qualify for a new long-term care policies are deprived of the risk covered by F or medical reasons also increased with increasing age.

Is long-term care insurance is still a good investment?

Although the proposed rate hike, the insurance is to protect themselves from potentially devastating costs of long-term the most cost-effective method of care. Discovered by the latest annual survey of the Metropolitan Research Institute mature markets, the national average rate of growth of 4.6% in 2010 in the private nursing home room, to $ eighty-three thousand five hundred eighty-five per year (an average of $ 229 per day). A home health aide hourly average interest rate remained at the same $ 21, cost a total of $ 210 ten hours working system (look in your area to pay in the way www.metlife.com/mmi).

Finding for these potential costs are an important part of retirement planning. “We talked about before the customer’s risk management, we talk ABOUT how their portfolio will invest,” Matthew Jarvis, a financial planner in Seattle, said, “If you outperform the × ?%, if you lose it all long-term care market, who cares. ”

Jarvis told clients the potential cost only three ways to pay:” you can pay for it from his pocket 100% inside out, you can figure out how to qualify for Medicaid, or you can buy long-term care insurance, “he said. Costs In most cases, Medicaid, pay for long-term care for those who can not afford to pay their own bills of federal-state cooperation in limiting your options, you get taken care of. – tends to limit nursing home payments, rather than home care and medical kicked you’ve spent almost all your money only after the

In T he past, some people transferred through asset to family members and waiting to play tricks system until retroactive three-year period expires before applying for government assistance. But more severe restrictions apply to today. Since February 2006, the transfer of assets apply for Medicaid over five years to extend the period of Ineligibility may trigger, in the meantime, you are prohibited from receiving assistance. Earlier, you gave away the penalty period start your assets, often you apply for Medicaid expires the day before. Now, the clock does not start ticking until you apply for government assistance – this time you may not have money left to pay the bills, and it could be months or even years before the medical procedure

“Suppose you arePolicy of harmonious Wi purchase date of your financial plan and long-term care insurance is the best way to pay long-term care costs, “Jarvis said.

How much do I need long-term care insurance ?

Jarvis recommended to buy coverage on the basis of monthly cash retired how much you can afford out of pocket cover flow.

For example, if the cost of care in your area of ​​$ 5,000 per month, you able to pay the $ 1,000 yourself, then you should buy a policy that covers the $ 4,000 per month for three years. Brian Gordon, MAGA Ltd., at the Riverwoods, Ill., who proposed fee only about long-term care financial planner , agreed with the approach based on cash flow. “we see who is to ensure that 100% of the full cost of a few people,” Gordon said. If you eventually need long-term care, or even be designed to cover only your part of the cost of the policy is valuable. For example, a 55-year-old can buy a Genworth policy is currently $ 1,480 per year, including a $ 150 daily benefit, a 5% compound inflation protection and benefit period of three years 80 years old, he would pay in premiums totaling $ 37 000. But in the 25 years of his benefits after inflation adjustment will have more than doubled to $ 330 a day. After only four months on welfare, he would withdraw all his investment, Jarvis says he still has more than half of the remaining two years of coverage.

If you buy a long thinking -term care insurance policy, do not put yourself too thin. consider buying a shorter benefit period or less of daily benefits, know ing, you may face future rate hikes. “I recommend that customers expect growth rate of 30% ~ 50% of a future time, “Jarvis said.” I hope that will not be the case, but I hate surprises. “