The anticipated higher long term care insurance premiums, which I discussed in a previous post called “Long Term Care Premiums Are Going Up … Up … and Not Away,” have done just that. They are now shockingly higher. Most people who purchased long term care insurance policies in the past ten years are receiving quite a jolt when they get their annual renewal notices. Some of my clients have reported premium increases as high as 90%!

Here are three reasons why premiums are skyrocketing:
1) Insurance companies overestimated how many people would allow coverage to lapse. Instead, very few people are terminating their policies.
2) Costs for providing care are rising much faster than projected.
3) More people are actually using the coverage available to them, in part because newer retirement communities and assisted living facilities are so nice, and don’t have the stigma of old-style “nursing homes.”

If you currently own a long term care policy, even with the shocking premium increase, your cost for coverage is still lower than if you shopped for new insurance today. Happily, there are some ways you can lower your premium. For starters, consider reducing your inflation protection. We suggest this because your policy limits will be higher than you initially purchased, thanks to the inflation adjustments already applied for the past years you’ve held the policy. For other ways to reduce your premium, we encourage you to talk with your insurance representative.