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.