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increase in LT Care Insurance Premium for 92 year old

By Terry Savage on December 01, 2019 | Insurance & Annuities

Hi Terry, my mom is 92 and she’s had a LT care policy with Genworth for many years. Her annual premium is ~$4,200 and will be increasing 52% in January for same level of coverage. They’ve offered her options that would keep her premium level by either reducing the benefit period (from 3 years to 2 years) or reducing the daily benefit (from $178 to $106). She lives in NY which has high cost of care. She’s healthy, lives on her own and still drives. Her house is paid (except for $60K HELOC) and she has ~$550K in IRA+savings. She doesn’t see the value in paying $6,400 annually to keep same coverage and believes at her age if she took ill she wouldn’t want to linger very long (she does have a medical directive) and so she is in favor of reducing the benefit period from 3 to 2 years and keeping the premium more or less level. They also offer a contingent non-forfeiture benefit of $61.5k in which she can stop paying premiums. I really don’t understand this option.

I know no one can predict the future and if she were to have a new policy written it would be a lot more expensive if she were even to qualify at her age. Any suggestions on how to proceed or what else we should consider that we may not be factoring into this decision? Thanks in advance.

Terry Says

Whew. Let’s note that a premium of $6,000 would cover just ONE month’s full time care in NY! But also note, that she probably has a 90 or 100 day DEDUCTIBLE on this policy, so it wouldn’t kick in until after that is paid. (And if you notice a decline, that is one reason you should “game” the system by asking her physician to certify that she needs care at least two hours a day for help bathing, for example.) That means you could get the “deductible” 90 days (or 100) out of the way at a far lower cost than paying for full time care! Ask your agent if she has to undergo a second deductible if she “interrupts” her period of care after satisfying the deductible.
I know this isn’t what you asked about — but I wanted to bring it to your attention because if the insurers are switching their premiums mid-stream you should have all the facts to get the most out of your policy! (You may have to argue with your mom to accept this minimal care on a daily basis — my Dad argued –until I explained it was a way to get the deductible satisfied at a reasonable cost!) At age 92 most physicians feel comfortable “certifying” the need for care to begin, based on difficulty completing two of the basic daily activities of living. Just a piece of info for you.

And now, back to your original question. You can’t play “God” on this. I personally HATE to give the insurance companies a “win” when they make this offer. I’m paying more myself just to spite them — though I hope I’ll never use it! (I realize that is not a scientific formula!) If you can’t afford the new higher premium, then do switch from 3 years to 2 –but do not lower the payout. Costs keep rising, while time keeps shortening.

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