Long-Term Care Insurance Update

It feels like we are writing about this topic quite frequently lately, but the New York State Department of Insurance recently approved massive premium increases for owners of long-term care insurance policies provided by three companies: Genworth, First Unum, and MetLife.

The story carried by the New York Times details the increases requested by these companies, mostly in the 85% range, but none will be raised by more than 60%. That still can be a huge amount of money. Let's say Sally buys a long-term care insurance policy when she is 60 and the annual premium is $3,500. Now Sally is 70, on a fixed-income and recently retired. If her annual premium increases 60% she will have to pay $5,600 this year to keep the policy. On average, that could cost her another $25,000 over the life of the policy in addition to what she already planned to pay.

This is the reason so many insurers are now offering a variable product, basically life insurance with a long-term care rider and some are even offering policies that just pay for in-home care. As we recently discussed, you will want to think long and hard if you are planning on canceling the policy because of the increase, because there could be a lot of hidden traps and exposure by canceling. We also think it's a great time to consider a Family Protection Trust.