Gary Brooks’s monthly column in The News Tribune on Dec. 1 highlighted changes in the long-term care insurance industry. Insurance companies are raising premiums and MetLife will stop taking new applications at the end of the year.
An interesting follow-up highlighting a real-life example comes from Brooks, Hughes & Jones partner Nancy Jones.
I purchased an LTC policy 10 years ago from Genworth Insurance. The premium has not changed. It has been $2,795 each year. If the policy premium had increased with a general inflation factor of 3% annually, the premium would now be $3,756.
If Genworth policies increase by 18%, as suggested in the article, my premium would become $3,298. This is less than it would be if it had simply increased at an inflation rate of 3%. It is important to me that the insurer price this product in such a way that the benefit will be able to be paid if and when I need it in the future. If my premium goes up by 18%, I’ll consider that very fair.
Stay tuned. I’ll let you know what the new premium is when my renewal is due next year.
Of course, the history of premium increases varies from one insurer to the next and one rating class to the next. Someone with a standard rating instead of preferred, may have had a different experience with rate increases.
~ Gary Brooks, CFP®, Allyn Hughes, CFP®, and Nancy Jones, CFP®, — Brooks, Hughes & Jones, Partners in Wealth Management, Tacoma, WA