Insurers throughout the country are asking state insurance regulators to allow price increases for long-term care insurance. Essentially, they are admitting they made mistakes early on by pricing the policies too low in order to compete for business. Now, faced with an aging baby boomer population, these companies are concerned they will be paying out more in claims than they anticipated. They want to counter this by charging their customers more money. An article from TheStreet.com reports in the past year, Genworth Financial requested increases ranging from 8% to 12% on some policies already owned by its customers; John Hancock announced a 14% increase in some existing policies in May 2008; and this week, MetLife announced it will raise annual premiums an average of 18% for policy holders who were younger than age 70 when they purchased policies in the years from 1998 through 2005.
Financial consultant and columnist Terry Savage queries, “isn’t it the job of the insurance company to assess those trends that impact pricing before they go to market — whether they be the rising cost of providing benefits or the cost of hedging against low interest rates that impact the investment of their reserves?”
We agree with Savage that insurance companies could be doing much better with customer service in selling, servicing and particularly in paying claims.
Still, Savage is an advocate for the purchase of long term care insurance, especially when compared to the alternative of relying on the government. She cautions against relying on government-funded programs such as Medicare to pay for long-term care because quality care options through government programs are shrinking rapidly.
And remember, the need for long-term care may arise long before you or your spouse even reach retirement or “long term care” age. Illnesses such as multiple sclerosis, fibromyalgia, Alzheimer’s, AIDS, lupus and a host of other debilitating ailments too numerous to name here may require assisted living or in-home care for years. We know because we help people with these issues every day.
With all the roadblocks policyholders often face when dealing with insurers – including having to hire lawyers like us to fight for their benefits – it’s still probably better to have some insurance than none at all.