Hello, everyone! I’m Julio Gonzalez, CEO of Pinnacle Financial Group, and I want to talk about something that’s been causing a lot of anxiety for families across the country – the rising cost of long-term care insurance.
You’ve probably seen headlines claiming that long-term care premiums have skyrocketed by 100% or more in some states. While I understand why these headlines grab attention, I want to give you the straight facts about what’s actually happening and, more importantly, what you can do about it.
The Real Story Behind Premium Increases
Let me start by setting the record straight. While long-term care insurance premiums are indeed rising significantly, the reality is more nuanced than those alarming headlines suggest. Based on the most recent industry data, approved long-term care insurance premium increases averaged 28% in 2024, which is consistent with the 29% average we saw in 2021.
Now, 28% is still a substantial increase that can strain many budgets, but it’s far from the 100%+ jumps that some headlines claim. We understand that any premium increase can feel overwhelming, especially for retirees on fixed incomes or families already managing tight budgets.
Why Are Premiums Rising?
To help you navigate this landscape, it’s important to understand why insurance companies are requesting these rate increases. The primary drivers include:
Higher Claim Frequency: More people are filing long-term care claims than insurance companies originally projected when they priced these policies years ago.
Longer Claim Duration: People are living longer and requiring care for extended periods, which means insurance companies are paying out claims for longer than they anticipated.
Lower Lapse Rates: Fewer people are dropping their policies voluntarily, which might sound good, but it actually means insurance companies have more policies in force than they expected – and more potential claims to pay.
Improved Life Expectancy: While living longer is generally wonderful news, it does mean more people will eventually need long-term care services.
We understand that these technical explanations don’t make premium increases any easier to swallow, but understanding the “why” can help you make more informed decisions about your coverage.
Your Action Plan: 6 Steps to Take Right Now
Whether you currently have long-term care insurance or you’re considering purchasing coverage, here’s your practical action plan:
1. Review Your Current Coverage (If You Have It)
If you already own a long-term care insurance policy, don’t panic if you receive a rate increase notice. Take time to:
- Read the entire notice carefully – understand exactly how much your premium is increasing and when
- Review your policy benefits – remind yourself of what coverage you have and whether it still meets your needs
- Check your options – most policies offer alternatives like reducing benefits to lower premiums
2. Explore Benefit Reduction Options
Before canceling a policy due to premium increases, consider these alternatives that many insurance companies offer:
- Reduce your daily benefit amount
- Shorten your benefit period
- Extend your elimination period (the waiting period before benefits begin)
- Remove optional riders you may not need
These adjustments can significantly reduce your premiums while maintaining essential coverage.
3. Consider Hybrid Life/LTC Policies
If traditional long-term care insurance feels too risky with these premium increases, hybrid life insurance policies with long-term care riders might be a better fit. These policies combine life insurance with long-term care benefits and typically offer:
- Level premiums that won’t increase
- Death benefit if you never need long-term care
- Return of premium options in some cases
4. Evaluate Self-Insurance Strategies
For some families, especially those with significant assets, self-insurance might make sense. This involves:
- Setting aside dedicated funds for potential long-term care costs
- Investing systematically to build a care fund over time
- Creating a comprehensive plan for how you’ll access and manage these funds when needed
5. Explore State Partnership Programs
Many states offer Long-Term Care Partnership Programs that combine private insurance with Medicaid asset protection. These programs allow you to:
- Protect assets equal to your insurance benefits from Medicaid spend-down requirements
- Access Medicaid for additional care if your insurance benefits are exhausted
- Maintain some financial security for your spouse and heirs
6. Don’t Wait – Costs Will Only Increase
Whether you’re 45 or 65, the cost of long-term care insurance increases with age. If you’re considering coverage, every year you wait means higher premiums. Even with recent increases, starting a policy today will likely cost less than waiting another year or two.
How Pinnacle Financial Group Can Help
At Pinnacle Financial Group, long-term care planning is close to our hearts because we see firsthand how families struggle when they’re unprepared for these costs. We understand that every family’s situation is unique, and there’s no one-size-fits-all solution.
Our comprehensive approach to long-term care planning includes:
- Policy review and analysis for existing coverage
- Comparison shopping across multiple insurance carriers
- Hybrid policy evaluation to find alternatives to traditional coverage
- Asset protection strategies that work with your overall financial plan
- Medicaid planning when appropriate
We work as your trusted partner to navigate these complex decisions, ensuring that whatever path you choose protects both your family’s financial security and your ability to receive quality care when you need it.
The Bottom Line: Don’t Let Headlines Paralyze You
Yes, long-term care insurance premiums are increasing, and yes, these increases can be significant. But letting fear of premium increases prevent you from planning for long-term care is like avoiding umbrella shopping because umbrellas are expensive – you might save money in the short term, but you’ll be soaked when it rains.
The reality is that long-term care costs continue to rise faster than insurance premiums. Even with premium increases, insurance often remains the most cost-effective way to protect your assets and ensure access to quality care.
We understand that making these decisions can feel overwhelming, especially when headlines create unnecessary panic. That’s why we’re here – to cut through the noise, give you accurate information, and help you create a plan that works for your specific situation and budget.
Your Next Steps
Don’t let another month pass without addressing your long-term care planning. Whether you need help reviewing existing coverage, exploring new options, or creating a comprehensive care plan, we’re here to help.
The best time to plan for long-term care was yesterday; the second-best time is today. We’re committed to helping you navigate this important aspect of your financial security with confidence and clarity.
Remember, every family’s journey is different, but no one should face these challenges alone. Let’s work together to create a long-term care strategy that gives you peace of mind and protects what matters most to you.
Ready to take action on your long-term care planning? Contact our team today to schedule your personalized consultation. We’re here to help you navigate these important decisions with confidence and clarity.
