This is a very common question… and a very common concern regarding long-term care insurance.
Long-term care premiums do not work the way your automobile insurance does. Just because you are getting older or are diagnosed with an illness does not mean your long-term care premiums will go up.
In fact, your premiums can’t go up just for you. Long-term care premiums can only go up for an entire class of insureds and only after the insurer can prove to the various state insurance regulators that their claims for a specific class have varied significantly from actuarial expectations. In other words, if they raise premiums, it must be for cause and for an entire class of similar policyholders, not just you.
So, there is the possibility your premiums may go up, over the very long time period you would expect to own a long-term care policy. In fact, it is not unlikely that they will go up. But you wouldn’t expect them to go up every year, like a health insurance policy might. On the other hand, they may never go up. You never know. It just depends on the claims.
Obviously, no one wants to pay more. The good news is there are a few things you can do to try to limit the chances of an increase in your long-term care premiums. The biggest is to purchase your policy from an insurer that is financially strong and has a large risk pool.
There are three primary ratings companies that evaluate the financial strength of insurers. They are AM Best, Moody’s and Standard and Poor. The ratings issued by the ratings agency are important because they indicate the insurers ability to pay claims. Financial strength also allows an insurer to absorb more variance in claims experience than a firm with a weaker financial position.