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Long Term Care Cost...How advisors can help

The cost of long-term care insurance is based on several criteria, including the number of clients who have kept their policies over time as well as customers’ longer lives.

Low interest rates also come into play, as they depress insurers’ earnings on their bond portfolios.

Last year, Genworth Financial received 120 approvals by state regulators to raise premiums. The weighted average rate increase was 45%.

Chad Chubb, a certified financial planner, walked a 66-year-old client through four premium increases on her long-term-care insurance policy.

In all, the retiree, who is single, has seen her annual premiums rise by more than 60% over the last six years. Her cost in 2018 was $2,721, up from $1,626 in 2013.

Expenses notwithstanding, she’s planning on keeping her policy, which she originally purchased in 2005.

“I understand that the price she pays today for the quality of policy she has is still excellent,” said Chubb, founder of WealthKeel in Philadelphia.

“But that doesn’t take away from how these types of increases can and will catch older individuals off guard,” he said. “Especially if they are on a fixed income.”

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