Do you worry about the cost of long term nursing care? We are all living longer and thankfully most of the time much better. Long term care is there for when we need some extra help. As more people are getting older more people are using the policies and rates have been increasing. If you do buy a policy how can you make sure your rates don't go through the roof?
Most seniors do feel that extended term health care insurance premiums are very expensive and rate increases can be difficult when you are on a fixed income. So let's try to understand what causes rates to increase and how you can protect yourself against them.
Consumers are often told to buy nursing home policies in their 40s or 50s, because of low premiums. Your agents will tell you that you are locking in a low rate because insurers can't hike premiums on individual policyholders. Here the catch though -companies can't raise rates on one individual policy, but they can and it is perfectly legal to increase rates on "blocks of business." In the long term care game what happens is their pool of policy holder's ages and starts making claims and lo and behold the insurance company raises your rates.
Also, carriers that are new to the extended term care business are much more likely to have rate increases because they don't have much actual claims data to base their rates on. If the company does not have hard data to look at they may have trouble assessing the risk properly. Additionally new insurers may not know how to screen buyers which may cause them to take on too much risk. Insurance experts say you should buy from a company that has been selling Long Term Care lines for at least 15 years.
Companies with solid financial ratings will be less likely to raise rates as much as smaller carriers with worse financial rankings.
Insurance experts in health-care planning say that if you have a big rate increase and can't afford it, find out whether you can lower the benefit period and keep your premiums the same. The average long-term-care claim is for less than three years.
Usually it is less expensive to keep your current policy than it is to switch to another company especially if you have developed health problems since you purchased the policy. If your health is the same or better than when you bought the policy and your policy is less than five years old then you should look around.
The government has done something to help protect consumers from increases in premiums. The NAIC Long-Term Care Insurance Model Act and Regulation was created to better protect consumers from rate instability. In August of 2000, the government added a provision to financially penalize companies that intentionally underpriced policies and, help state regulators prevent insurers from doing this. Also, the new model requires insurance companies to tell more about premium increases and gives you more choices when your premium is increased.
As you can see, we are not entirely helpless when it comes to long term care. The government offers us some protection and if we do our research we can make the best possible choice.