Trading Up: When to Replace Your Long-Term-Care Policy
The Wall Street Journal, November 15th, 2007
So you've got a long-term-care policy. Congratulations. Now consider dumping it.
One of the biggest knocks on long-term-care insurance
-- which pays for costs such as assisted living, nursing homes and home
health care that Medicare and other insurance generally don't -- is
that many policies were wildly underpriced when they were first sold,
causing insurers to push premiums much higher in recent years. In
Florida, where 70 to 80 long-term-care insurers have written policies,
roughly half seek rate increases in any given year, according to state
insurance officials -- meaning many of Florida's 375,000 long-term care
policyholders routinely are hit by higher rates.
But such rate increases are rare with newer policies,
largely because of model legislation written by the National
Association of Insurance Commissioners, imposing more-stringent
standards that effectively reduce insurers' profits when they seek rate
increases. The legislation, adopted by many states in recent years,
means new policies tend to be priced more appropriately, and insurers
generally haven't needed to increase rates.
So should consumers who routinely confront rate increases replace their current long-term-care coverage with a new policy?
"That would be a reasonable consideration" for some
policyholders, says Peter Katt, a fee-only insurance adviser in
Mattawan, Mich. Sandy Praeger, the Kansas insurance commissioner and
president-elect of NAIC, agrees, saying that baby boomers who already
have a long-term-care policy "ought to at least take a look" at whether
a better policy is available.
Read more of this article.
Long Term Care Insurance:
Learn more about whether long term care insurance is a good asset
protection strategy for your retirement on NewRetirement.com.