There is no question that economic situations change, and when they do people can be impacted ["Is Your Long-Term Care Policy Safe?" usnews.com]. However, it is important for consumers who are concerned about how they or their family will deal with future needs for long-term care to understand that the past does not necessarily equal the present or the future. Many of the policies issued years ago were priced properly for the time. At that time, interest rates that would be earned on the invested premiums was, say, 7 or 8 percent. Today, they are, say, 3 percent. Leading actuaries will tell you that for every 1 percent decline in interest rates, an insurer would need about a 10 percent increase in premiums. Just one example of what happens. So, while lower interest rates were great for those refinancing their mortgages, they were lousy for long-term care insurers. But, the important point to understand is that regulators have learned much in the past decade . . . so have insurers. And interest rates can't go much lower. That's not to say consumers should not ask their agent about the ratings of the insurance company being considered. But, it would be a big mistake to allow one incident to tarnish an entire industry that paid out $3.5 billion to 180,000 individuals in 2007 (and will undoubtedly have paid more in 2008).
Comment by Jesse Slome of CA, Executive Director, American Association for Long-Term Care Insurance
Rates are a concern, as well as premiums that are being paid into long-term care and never being used. There is a "what if" the LTC insurance is never needed because of an unexpected death. I have been looking into the idea of how to leave behind my premiums paid into the LTC insurance to my family. I think I have found a solution called "Care Protector Plus" by Preservation Advantage. I'm having my financial planner look into it.
Comment by Joseph Gillen of OH
In reference to looking into a policy that would return unused premiums—most carriers offer this rider. It is called Return of Premium Rider and will return any premium that has not been used up in claims to the beneficiaries. However, since it is a rider and will increase the cost of the policy premium, you might also look at taking that extra cash and purchasing a life insurance policy, which, in many cases will affect a better return. In my 25 years in this business, it amazes me that folks very often ask "What if I never use this policy?" Do you ask the same question of your homeowners or auto insurance companies? And yet, the potential cost of your LTC services could make the cost of replacing your wrecked car look like peanuts. This insurance is a bargain any way you look at it.
Comment by Barbara Stahlecker of SD
Those who rail against the coverage or suggest the protection is a rip-off have not researched the more than $1 billion in claims dollars paid out. It is true there were errors among some of the early marketers of this insurance who did not understand the actuarial parameters that need to be adhered to. However, this coverage is a matter of mistakes. Having paid the premiums and not using the coverage could be a small mistake. Not having the coverage and having a costly long-term care situation would be a big mistake! By the way how much homeowners or auto insurance has anyone received back?
Comment by Barry of AZ