[…] 44% of respondents said that they didn’t have long term care because it was too expensive, but overall, respondents greatly over-estimated the cost of a long term care policy. The average annual premium in 2009 was $2207, but respondents in the Prudential study estimated it to be $3900. This misperception could be a factor keeping people from purchasing long term care insurance, despite their concerns about their ability to pay for future long term care needs.
[…] My guess is that over the next decade or so, we’re going to see discussions about long term care that will look similar to what we’ve seen in the last couple years regarding health insurance. The rate hikes we saw last year in the long term care insurance industry were a sign that long term care is becoming more expensive than ever, and as the population ages, there will be a steadily increasing demand for long term care services. Other nations are starting to address the subject in their legislative bodies, and although the US tends to prefer private market solutions, it remains to be seen whether government programs like CLASS will become more widespread and robust as time goes by.
[…] Preparing financially for future medical care is obviously a major task, but it’s one that needs more planning that simply purchasing insurance. Yes, long term care insurance and Medigap policies will help to pay for care that isn’t covered by Medicare, but people also need to make sure that they have a financial strategy in place for paying for care that isn’t covered by insurance, and for dealing with premiums that can and do rise over time. […]
[…] One of the most important lessons from the wave of recent premium hikes on long term care policies is to keep in mind that the premiums are not fixed. Although they don’t increase as frequently as health insurance premiums, they are not locked in the way term life insurance premiums are. Unfortunately, some agents might not have communicated this clearly to their clients. Other insureds might have had several years without a rate increase and started to think that the policies simply didn’t have rate increases after all. It’s important that agents who help clients select long term care coverage are clearly communicating the fact that the premiums can – and likely will – increase as the years go by. If the insured is stretching financially to cover the initial premiums, the long term care policy might not be the best fit.