Long Term Care Insurance premiums continue to trend up slightly in the 2018 National Long-Term Care Insurance Price Index from the American Association for Long-Term Care Insurance. This is mixed news as it reinforces that insurance companies are seeking stability in their pricing and that these increases may also help to minimize future premium increases on both existing and new long term care policies. While there are not many insurance companies offering individual LTC policies, the index does show that if you are considering LTC insurance, that you should compare options (always shop around) as premiums will vary by company based on a wide-range of factors including age and gender – women do have higher premiums as they live longer and will most likely have a higher claim rate.
The price index is only for individual LTC policies and does not cover combination life/LTC policies or life insurance policies with LTC riders. As I’ve written about previously, the combination policies only make sense if you have a permanent need for life insurance and can afford the large single premium (lump sum payment) and less comprehensive LTC coverage – note life policies with LTC riders allow for annual premium payments rather than single premium only. A single premium option can make sense if you have older cash value life insurance policies that would have taxable gains if surrendered, since they can be exchanged to the combination life/LTC policy on a tax-free basis (IRS Section 1035 exchange).
Individual LTC policies continue to make the most sense since you are purchasing pure risk protection just like when you purchase auto insurance, homeowners insurance and health insurance. A combination or hybrid LTC policy will incur costs for the life insurance and cash value and provide you less value. LTC rate increases will be featured in the newsletter shortly, in the meantime, you can read What’s next for the Long Term Care Insurance Marketplace from last year.