If you are a long term care (LTC) insurance policyholder who has had a policy for five or more years, you are likely to get an unpleasant piece of mail if you have not already: a whopping increase in your LTC insurance premium. Double digit percentage increases are the norm and 85% and higher increases have been levied on some policyholders. Worse yet, just because you had your premium increased significantly does not mean that you will not see your policy cost rise even further in future years. To add insult to injury, several significant players in the LTC insurance market have seen their credit profile degrade resulting in lower claims-paying ratings, raising the chance that they will have difficulty paying claims down the road. In this post I will discuss the economics of LTC insurance, how insurers got themselves into trouble with this product (necessitating giant rate increases), and what to do if you have an LTC insurance policy and get slapped with one or more premium increases.
