Dealing With a Long Term Care Insurance Premium Increase - Is it Worth Cancelling Your LTCI Policy?

For those that have long term care insurance, and particularly those that purchased long term care insurance many years ago, you have likely received a notice about the premium for your insurance increasing.
We have seen clients have their insurance premiums rise nearly 100% over the last few years, so these are not insignificant changes and this can mean many tens of thousands of dollars more in expenses over the course of your life.
If you have received a notice like this, you are absolutely right to wonder if it is worth paying these higher premiums.
Here’s how we help our clients decide the best course of action with their long term care insurance:
First, it is worth considering how your financial picture has changed since you purchased the policy, as it may not be needed any more at all. If you originally purchased this policy 20 years ago, you may have now seen your investment accounts grow and be in position to not need this insurance.
Next, you can consider reducing your coverage to help reduce the premium increase. Perhaps you are not ready to bear the full brunt of a potential long term care expense, but you could afford to pay some out of pocket if needed. If so, you may have the option to reduce your benefit, or lower the inflation increase of your benefit to reduce the premiums but still leave you with some coverage.
Finally, we’d just say that rates on long term care insurance are going up because the costs and use of long term care are going up as well. So while you may be disheartened to see a higher premium, know that the financial costs of needing long term care are also as high as they have ever been. So it may very well make sense to keep paying.
The tough thing about insurance is that the best course of action is different for everybody. It may make perfect sense for you to pay $5,000 per year for insurance, and your neighbor to forgo their insurance. To really answer this question about whether or not it makes sense to continue paying for long term care insurance, you need to take a detailed, holistic view of your financial plan.
At Arnold and Mote we are fee only, fiduciary financial advisors that help our clients with questions just like this every day. If you’d like to see how we work with clients to develop financial plans, please reach out.
SyncID: MB01PZBY7LI13EJ

[@missouri6014]

so please do a video on the alternatives. Thank you

[@ArnoldMoteWealthManagement]

Thanks for the comment, we'll make sure more related content gets scheduled for future videos. It is a hard topic to get into a lot of specific detail in over a mass market video though. So much of it just depends on your particular situation. We'll typically build a few scenarios in our planning software to see how your plan can handle different levels of expenses, and options you are presented with as part of a premium increase. There is no "right" answer that is good for everyone. Some need the coverage, some don't, and some could benefit from a reduced benefit.