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With premiums increasing drastically, should I keep my long-term care insurance?

This is a question that I receive on a regular basis in my estate planning and elder law practice. By way of full disclosure, I am not a licensed insurance agent and I am not licensed to be able to sell long-term care insurance or any other insurance product. I am an attorney with approximately 20 years of experience in estate planning and elder law and I happen to be a Certified Elder Law Attorney under the authorization of the Pennsylvania Supreme Court. While I am not the person who will sell the products, I am certainly an individual who has been advising numerous clients over the years and definitely believe in the benefits of a long-term care policy and what they can provide. We have done numerous other logs about long-term care insurance and the benefits of said policies.

When long-term care insurance first gained popularity, many companies completely missed out on the actuarial tables and in predicting what people were going to need. Because of this drastic miscalculation, most of the companies who originally were in the markets for long-term care insurance are no longer there. The few standing companies that are left are trying to figure out ways to make up for the mistakes of the past. Because of that, they are often forced to increase premiums and decrease benefits. Although these companies do have to get permission from the insurance board, it is not a very difficult proposition and in most cases, they will almost always be able to receive permission. The most difficult part is that individuals have been paying into a plan for a number of years and now are learning that they’re going to have to decrease their benefits and even then they may have to increase the premiums that they are paying. It is heart-wrenching to have to provide guidance in these situations and ultimately I always encourage them to bring in their financial professionals to try to make the decisions.  This is as much about the numbers and common sense as it is about the emotion involved. This becomes very easy for us to get disgusted and upset about what is occurring, but it is a cold, harsh reality of the miscalculations that were made in the past.  In some instances increasing premiums and decreasing benefits is the only way some of these companies will survive. 

My best advice to any and all people who are faced with this dilemma is to write out the pros and cons and to try to make the evaluation and determination about numbers and as little as possible about the emotion of the situation. It is too easy to get hung up on the principle of the manner, but the truth is principals are expensive and cause wars. Make the best decision for you and your family based upon the information that you have in front of you. Long-term care is not going away and dropping the policy out of spite is not going to help anyone. 

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jeffrey bellomo

Jeffrey R. Bellomo, Esquire is a Certified Elder Law Attorney by the National Elder Law Foundation under authorization of the Pennsylvania Supreme Court. As the owner of Bellomo & Associates, LLC he advises families about the legal challenges facing them today. He counsels clients and provides solutions on: Asset Protection, Special Needs Trusts, Wills, Trust Design, Guardianships, Medicaid and Estate Planning & Administration. His mission is to provide professional caring service to all his clients.

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