There are a variety of ways of paying for a Long-Term Care Insurance policy. Two of these are: pay the policy premium until some significant birthday in the future and pay the policy premium for a designated number of years. What about a limited pay long term care policy?
Some policies are called pay – 65 or pay – 70. With these policies your pay an accelerated amount for a premium that allows you to pay off the policy for life by your 65th or 70th birthday.
Other policies are called pay 10 or pay 20. With these policies your pay an accelerated amount for a premium that allows you to pay off the policy for life in either ten or twenty years.
It’s nice to have options, but is there a benefit to purchasing a limited pay Long Term Care policy? The answer is “Maybe”.
Long-Term Care Insurance policies are guaranteed renewable. The renewability is guaranteed, but the amount of required premium is not. Policies with accelerated pay are actuarially based on rates in use at the time the payment schedule is established. If rates change it is normally because of assumptions that cause the insurance companies to have unfavorable results. IN this zero sum game you lose and the company wins if you don’t “freeze” your premium level.
The trend in the market has been for substantial rate increases as people are living much longer and requiring a greater amount of care than originally planned.
With Baby Boomers putting increased pressure on the system companies will be less likely to tie their hands as far as charging adequate premiums. Long term care insurance will become only more important.
If something odd happens, and insurance companies find that people aren’t requiring as much long term care as was once thought, these accelerated payment plans will not be an economic advantage.
Other Enhanced Insurance articles related to Long-Term Care Insurance:
Long-Term Care Insurance (With Video)
Enhanced Insurance is not written by attorneys. If you’re looking for legal advice, you need to contact a lawyer. Further, insurance practices and forms change constantly and are varied from state to state. For definitive answers in your area, contact a local agent.
While the majority of people want an agent involved in their purchase of insurance, many people want to see if they can save money by buying direct from the insurance company. Others want to try a direct quote to make sure the premium they’re now paying through their local agent is fair. If you want a quote for your coverage, click on the competitive quote button on the right side of this page.