Several of our clients purchased long-term care (LTC) policies many years ago.

For the clients who needed LTC policies, they’ve been a blessing. Our clients who need LTC get better care sooner if they have these policies in place. It makes sense—the policy is there for this need and it can be difficult for the spouse or kids (or other family members) to try to provide care on their own. That’s good for the person who needs care and for the spouse, kids, or family members who are trying to help.

Many of our clients are receiving notices from the insurance company that their premiums are increasing by 10% or more. One particular company had an annual increase of 12% in 2020 on top of an 18% premium increase in 2019.

As you get these premium increases, you need to consider:

  • Is the maximum daily benefit more than the potential need? If so, you may look at reducing the maximum daily benefit as a way to reduce your annual premium.
  • Is the benefit period adequate? Some benefit periods are 3-5 years. According to the American Association for Long-Term Care Insurance, 76% of time in nursing homes is less than 3 years.
  • Are you adequately protected against increasing costs?
  • Elimination period—this is the number of days before the benefits begin. Some alternative options increase the elimination period, but this increases your out of pocket costs significantly if you ever needed the policy.
  • Coinsurance—this is the amount of cost you will share with the insurance company.

It could make sense to keep the current coverage and pay the increasing premium or to take the alternative premium options. It’s important to understand how your premium options fit with your circumstances.

If you don’t choose wisely, the seemingly minor changes to the policies could mean much larger out of pocket expenses down the road. If you need assistance understanding your options, please do not hesitate to contact us.


 – Richard O’Donnell, CFP® | Director of Financial Planning