Does the insurance carrier have the right to increase my LTC insurance premiums over time?
Yes. However, LTC insurance premiums are based on your age and medical history when you apply for insurance. These rates can only be increased if the appropriate state insurance commissioner approves an increase and if rates for all similar policyholders are also raised. Furthermore, if rates are raised, your new premium will continue to be based on your original age (i.e., your age at the time of purchase – not your age at the time of the rate increase).
While many carriers have requested and received approval for rate increases on existing policyholders, most such increases have been on older products that were priced before the carrier had any real basis for pricing this type of insurance. Such products were often priced very low, due to erroneous assumptions about lapse rates on LTC insurance as well as other factors. Because some of the early products were subject to extremely high rate increases, the National Association of Insurance Commissioners created Rate Stabilization regulations, designed to reduce the likelihood of rate increases on LTC insurance. Most LTC insurance products in the market today are subject to rate stabilization, and are therefore less likely to be subject to rate increases in the future. However, currently, all LTC insurance is “guaranteed renewable,” which means that rates could increase in the future. The only way to limit the possibility of future rate increases is by electing a plan design that includes a limited premium duration – e.g., one which only requires premium payments for 10 years or one that requires you to pay premiums to a specified birthday.