Update on Long-Term Care Insurance

Things have calmed down the last couple of years in long-term care insurance. Back then, insurers were busy substantially increasing premiums on existing policies, and many exited the market. The latest news is that the largest LTC insurer announced a large charge against earnings because it still has problems with LTCI despite premium increases. This article gives three key takeaways from the news.

You’re unlikely to find a better deal by switching insurers. When policyholders get word of a rate hike, they often wonder if they would do better to switch to a new policy from a different insurer. “Inevitably the answer to that question is going to be no,” says David Wolf, an insurance broker in Spokane, Wash., who works with financial advisers. “I’ve never run a scenario where replacing a policy was more advantageous from a pricing perspective.”

That’s because insurers have repeatedly raised prices on new LTC policies, upon realizing the mistakes in pricing policies in years past.