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How to deal with increased Long Term Care Insurance Premiums.

Pay the new premium, Reduce Benefit period, Reduce Daily Benefit, Reduce inflation Rider or cancel policy.

Many Insurance companies offering Long Term Care insurance policies are facing hard times and are having to increase premium rates for older people who use these insurance policies.

For people who bought their insurance years ago, the rate increase may be cheaper than buying new insurance currently but the increases can actually become unaffordable for some seniors, most of whom have fixed income from Social Security and little retirement savings.

Long Term care insurance is usually eligible for tax free benefits to the insured and the law states that the insurance company must guarantee that it is renewable to the client as long as they pay their premiums. So the insurance company cannot deny coverage to a client as long as they pay their premiums.

However the insurance companies are allowed to increase premium rates for people, not individually, but groups of people that fit a certain criteria, say people over 60 years who bought insurance in 1990.

The Government allows these rate increases because if the premiums set long ago are currently too low, the insurance company runs a risk of being unable to pay claims from policyholders.

When the premiums on your insurance increase, the insurance company can give you have several options that you can choose from depending on your financial status and your health status:

Accept the increased premiums.

You can keep your current policy as it is and agree to pay the new increased premiums. This is a good option if you like your current policy and are able to pay for it without much strain to your finances. This may also be the best choice given the rate increases are still lower than getting a new similar insurance policy.

Reduce Benefit Period.

You can also keep your current policy but reduce the policy's benefit period. If you are paying premium of $50 for a 10 year benefit period and they increase your premium to $100, you can reduce your benefit period to 5 years and remain with a premium of $50. This may be a good choice if you are healthy and don't expect to be incapacitated for a long time before you pass away.

Reduce Daily Benefits.

You can also keep your current policy but reduce the daily benefits from the policy to what you can afford to pay for. For example if your current daily benefits are $300 and its costing you $50 in premiums, if they increase your premiums to $80 for the same daily benefit of $300, you can reduce your daily benefits to say $200 and that will reduce your premium to something closer to $50 which you were paying before. This may be a good option if you don't expect to need too much money during the time when you will be using the insurance benefits. For example if you locate to a cheaper part of the country, you will spend less.

Reduce or remove Inflation Rider.

If you bought an inflation Rider in your current policy, that is when your daily benefit increases by a fixed percentage each year for a specified period of time to cover for inflation, you can reduce the inflation rider so that your premiums don't increase to an extent that you cannot pay. This can be a good option if you don't expect inflation to rise too high. Or you can also plan to relocate to another part of the country that is cheaper to live even with increased inflation rates.

Or Cancel Policy.

Finally you can cancel your long term care insurance policy if the rates are too much for you.


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