What Lies Ahead: Up, Up, and Away

John Ryan, of Ryan Insurance Strategy Consultants in Greenwood Springs, Colorado, says that advisors need to consider a number of factors when focusing on long-term care insurance for clients. First is the fact that clients with existing policies will find it very hard to replace the features they already have without paying a lot more, if indeed they can get them. "Companies are starting to promote a guaranteed purchase option instead of inflation protection," he says. Purchasers can increase their coverage "at the going rate" every three years, but he warns that "if you price it out in the long run, it's usually around 15% to 18% more expensive than buying an automatic [inflation protection feature]."

Lifetime benefit periods, he says, are going away, as are short elimination periods. In five years, he predicts, people will be forced out of those features. "'We'll give you a 27% rate increase unless you change to a 90-day waiting period,'" he theorizes an insurer saying; people will be "coerced into changing their plan design, with the riskiest insurance companies hitting first and hardest." Some companies already no longer offer a lifetime benefit, and costs are going up everywhere, even on the formerly "really competitive" ten-pay plans, in which a policy is paid up in ten large payments with no further premiums due.