Double-digit premium hikes coming in LTC
By Paula Aven Gladych
People with long-term care insurance should brace themselves for double-digit premium increases.
The average cost of a long-term care policy has risen 80 percent since 2007, when the average annual premium was less than $2,000, according to industry statistics. Now costs have risen to more than $3,500 a year and large insurance companies, like John Hancock Life Insurance Co. and Genworth Financial Inc., say they are looking to make back some of their costs by raising their rates.
Many insurance companies who entered the market a decade ago were trying to build their businesses so they offered low rates for this type of insurance. But now, a decade later, they have come to realize that they didn’t ask enough to cover costs. They didn’t realize how many people—8 million Americans—would take advantage of these policies. They also didn’t take into consideration the longevity of most people.
All of these factors have forced some carriers out of the business and, if major rate increases are not approved, others may follow. These increases hit the elderly when they can least afford to pay the higher rates. In the past couple of years, many people have dropped their policies or adjusted down some of the benefits they receive through their policies so they can keep their rates down.
Originally published on BenefitsPro.com