Future Long-Term Care Insurance Rate Increase Risk Near Zero

The head of national consumer education and advocacy group states the risk of future premium increases on today’s Long-Term Care Insurance is nil. This is good news as more people nowadays are planning for the costs and burdens associated with aging, health, and long-term care. 

For many, Long-Term Care Insurance is a big part of retirement planning. However, some consumers are concerned with what they read about rate increases.

The American Association for Long-Term Care Insurance (AALTCI ) completed a study reviewing the pricing expert’s opinions of today’s Long-term Care Insurance. The research shows that under the new regulations, pricing, and actuarial methods, consumers face little if any chance of future rate increases under the products being sold today. The AALTCI just released results of a poll of actuaries across the Long-Term Care Insurance industry.

Policies priced years ago using different assumptions have seen rate increases so consumers today assume they face the same risk. That’s simply not the case.”  —  Jesse Slome, director of the AALTCI.

Rate Stabilization Rules Help Consumers Plan in Confidence

Rate stability rules that are in force in most states require even more conservative assumptions than ever before. (You can see if your state has these rules in place).These rules include several factors, including:

1. More accurate and conservative underwriting. 

Major companies have more knowledge and actual claims experience today than they did when they designed and priced the older “legacy” products. The insurance companies can price their products much more accurately since they know their expected claims and the health problems which initiated those claims. With this knowledge, they can set appropriate underwriting standards and rate classes and pricing that match the risks they are taking at the time of application.

2. Lapse rates.

When insurance companies started selling Long-Term Care Insurance, they never expected policyholders to keep their policies in force in the numbers they actually do. They expected the lapse rates to be no different from any other type of policy. The fact is when a person purchases a Long-Term Care policy; it stays in force. The older legacy policies were never priced for low lapse rates. Companies now use a lapse rate assumption of less than one percent per year. 

3. Interest rates.

Did anyone expect interest rates to drop and stay as low as they have been for as long as they have been? The answer is no. The low-interest rates had a tremendous impact on the investment returns actuaries expected. Today’s Long-Term Care Insurance premiums reflect extremely low-interest rates. As the interest rates go up, pressure on interest rates from a premium standpoint goes down. This is good news for both the policyholder and the insurance company.

Most actuaries responding see little or no the risk of needing future rate increases on recently priced policies." — Jesse Slome

Some 79.1 percent of the responding actuaries expressed the risk was 10 percent or less.

Articles About Older Legacy Products Don't Apply to Today's LTC Policies

Older Long-Term Care Insurance policies priced 10 or 20 years ago used different pricing assumptions and generally had specific policy provisions that necessitated the need for premium increases. When you read articles about premium increases, it applies to these older products, not today's Long-Term Care Insurance.

“Back in the 1990s, Long-Term Care Insurance was a new form of protection and there just wasn't the data available. With several decades of experience and millions of policies sold and hundreds of thousands of claimants, policies priced today can more accurately project important aspects.” Jesse Slome. 

Today's LTC Insurance Provides Benefits Most People Want

Long-Term Care Insurance specialists have seen the industry grow and change over the decades.

"Thirty years ago, the only option for protection were nursing home only policies. Over time, as the market change and demand for planning increase, policies changed. They then provided a continuum of care from your home to assisted living facilities to nursing home care. With the expanded benefits, the industry did not price the products based on increased utilization, underwriting, and other actuarial considerations. Today's Long-Term Care Insurance remains very affordable, but is priced and designed to be rate stable," said Brent Donarski, a Long-Term Care specialist with 30 years' experience in the industry.

Donarski, who operates My LTC Specialist, says the industry has become much better in fulfilling the needs of individuals in need of care in the environment and care location they are most comfortable.

"I have assisted in thousands of claims with the adult children of the policyholder, and they have such a relief knowing that their parents planned ahead for their long-term care needs. Yes, the industry has had some challenges along the way, like other industries, but today has never been a better time for people who are interested in protecting their families from the emotional and financial burdens of long-term care. The good news is that today's Long-Term Care Insurance is priced with more experience and under new rules that make them affordable and rate stable," — Brent Donarski, a Long-Term Care specialist

Confidence in Today's Long-Term Care Insurance

The AALTCI report underscores confidence in the industry pricing models.

I believe the risk of future rate increases is zero. Rising interest rates and the new regulations mean someone purchasing a new Long-Term Care Insurance policy today faces little if any chance of a future rate increase." — Jesse Slome

The policy designs available in today’s products also add to the pricing confidence compared to older legacy products.

Older policies with provisions like unlimited policy benefits or compounded annual benefit increases of five percent may face rate increases, but even these are never take-it or leave-it propositions.  Insurers always offer options that enable the policyholder to avoid the increase.”

Three Types of Products Available

There are several ways consumers can plan for the financial costs and burdens of aging. These include:

1. Traditional Long-Term Care Insurance.

This category includes partnership policies that are available in most states that offer additional dollar-for-dollar asset protection. Traditional LTC Insurance offers many affordable features and benefits, including shared spousal/partner plans. Tax incentives are available for some people and for the self-employed and businesses. Pre-tax money from Health Savings Accounts can also be used to pay premiums. Generally, these plans have more conservative underwriting but are priced very affordability, depending on your health and age at the time of application.

2. Asset-Based/Hybrid Plans.

These are either life insurance or annuities with a rider to cover long-term care costs. They are often single premium products, but some companies offer limited payment options or even annual payment options with premiums can never increase. These plans provide a death benefit in the event the policy is not used for long-term care costs.

3. Limited Duration/Short-Term Plans.

These plans are designed to provide a limited amount of benefits, often at home. The underwriting rules are usually broader, and the age limits for eligible applications are wider.

Donarski says an experienced Long-Term Care specialist can help you find an appropriate plan placed on your age, health, concerns, and budget.

• Types Of Long-Term Care Insurance Policies & Which Is Best For You

Research Options with LTC NEWS Tools

Long-Term Care Insurance is custom designed. While a specialist can make professional recommendations, you get to decide the total amount of benefits you wish to have in place.

No matter the size of the policy, Long-Term Care Insurance is helping American families take care of their loved ones. Long-Term Care Insurance claims are expected to reach $44 billion annually by 2041, reflecting a sharp increase in the number of older Americans needing help with daily activities. Long-term care insurers paid a record $14.1 billion in policyholder claims in 2024, with total annual benefits nationwide approaching $17 billion.

These benefits provide the policyholders and their families with their choice of quality care in the setting they desire. The policyholder maintains control and independence. Most states have rate stabilization rules in place. Forty-five states offer Partnership Long-Term Care Insurance policies that provide additional dollar-for-dollar asset protection. Find your state's details.

The cost of long-term care services increases every year. Find the current and future cost of care services in your area by using the LTC NEWS Cost of Care Calculator. You will also see key facts about your state, including the availability of tax incentives.

LTC News can help you find a trusted and qualified specialist. A specialist can match your age, health, and other factors with the best options. Premiums vary between insurance companies by over 100% for the same benefits.

Frequently Asked Questions About Long-Term Care Insurance and Premium Stability

Why did some older Long-Term Care Insurance policies experience premium increases?

Many policies sold in the 1980s, 1990s, and early 2000s were priced using assumptions that proved inaccurate. Insurers underestimated how many people would keep their policies, overestimated investment returns, and had limited claims experience. As a result, some legacy policies required premium increases to remain financially sound.

Are today's Long-Term Care Insurance policies likely to have future premium increases?

According to actuaries surveyed by the American Association for Long-Term Care Insurance (AALTCI), the risk of future premium increases on recently designed policies is considered very low. Modern products are priced using more conservative assumptions, stricter state regulations, and decades of real-world claims data.

What are rate stabilization rules?

Rate stabilization rules are regulations adopted by most states that require insurers to use more conservative pricing assumptions when designing Long-Term Care Insurance products. These rules are intended to reduce the likelihood of future premium increases and provide greater pricing stability for consumers.

Why are insurers better able to price Long-Term Care Insurance today?

Insurance companies now have decades of claims experience, more accurate health and longevity data, and improved underwriting practices. This allows them to better predict future claims costs and price policies more accurately than in the past.

What role do lapse rates play in Long-Term Care Insurance pricing?

A lapse rate refers to the percentage of policyholders who stop paying premiums and let their coverage end. Early Long-Term Care Insurance products assumed many people would drop their policies. Instead, most policyholders kept their coverage. Today's policies are priced using much lower lapse-rate assumptions, making pricing more realistic.

How do interest rates affect Long-Term Care Insurance premiums?

Insurance companies invest premium dollars to help pay future claims. Older policies were priced when higher investment returns were expected. Today's products are designed using conservative interest rate assumptions, reducing the risk that investment performance will create future pricing pressure.

Do articles about Long-Term Care Insurance premium increases apply to policies sold today?

Usually not. Most reports about premium increases involve older legacy policies sold years ago under very different pricing models. Today's products are designed under updated regulations and actuarial assumptions that did not exist when many older policies were issued.

What types of Long-Term Care Insurance products are available today?

Consumers generally have three primary options:

• Traditional Long-Term Care Insurance
• Asset-based or hybrid life insurance and annuity products with long-term care benefits
• Short-term or limited-duration care plans

Each option offers different benefits, underwriting requirements, and premium structures.