What factors determine your Long Term Care Insurance rates?

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Long Term Care Insurance companies determine your premium rates based on several factors which are:

1. Your Age: The younger you are when you apply for long term care insurance the lower your rates will be.

2. Your Health: Your health at the time the long term care insurance policy is issued will play a factor in the rates.  Long term care insurance premiums are higher if you have health issues such as Diabetes, Hypertension (high blood pressure), etc.   The Long term care insurance companies will ask for permission to get your current health records from your Doctor and then the underwriters will review them to put you into a rates class.  Most companies will offer preferred, standard, rate 1, or substandard rate-class.  In some cases the long term care insurance companies will ask you to do a physical exam or a memory exam to check for Alzheimer’s or other cognitive disorders.  When you fill out the long term care insurance application be sure to answer all health questions truthfully and to the best of your knowledge. This will help you avoid complications when a claim arises.  If the long term care insurance company learns you did not fully disclose your health status on the application, they could deny your claim or cancel your coverage.

3. Elimination Period (deductible): The longer your elimination period is on your long term care insurance policy the lower your rates will be.  When planning for your deductible find the longest deductible that you could afford to pay out of pocket.  Typical long term care insurance deductibles are 0, 20, 30, 60, 90, 100, 180 days.  Most people choose a 90 day or less deductible on their long term care insurance plan.

4. Daily or monthly benefit amount and benefit period:  The more money you have available per day or per month will increase the premium.  For example, a long term care insurance plan that provides $5000 per month in benefits will be double over a plan that pays only $2500 per month.  Most companies will allow you to choose from $100 per day up to $300 per day in benefits.  When determines how much coverage to choose be sure to examine the cost of care in the area you live in.  Your benefit period in your long term care insurance plan is the amount of time they company will pay you your benefits.  You can choose from 2,3,4,5,8,or unlimited or lifetime coverage.  The average time people need long term care insurance is about 3 years.

5. Other factors that will effect your long term care insurance rates: Adding optional benefits like automatic inflation protection  (5% compound or 5% simple inflation protection) which is the most common rider.  There are other riders like restoration of benefits, survivorship rider, dual waiver of premium, shared care rider, and non-forfeiture.  All of those riders will increase your long term car insurance rates.

Premium Rate Increases: Individuals cannot be singled out for a premium rate increase no matter how many claims a person has filed or a increase in age.  Insurance companies however can raise the premiums on policies, but only if they increase the premiums on all policies in your rate class (category) and the rate increase is approved by your State’s Insurance Commissioner.  Your long term care insurance rate class may be based on your age, the State you live in, and your health status at the time you applied for your long-term care insurance policy. Once you are approved you policy is guaranteed renewable.  That means that any change in your health cannot result in a cancellation of coverage by the long term care insurance company.  The major long term care insurance companies that have not raised rates on existing policies are Genworth Financial (formerly GE Capital), John Hancock, MetLife, Prudential, Allianz, Mass Mutual, and New York Life.

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