Long-term care insurance is not cheap. And, as premiums continue to rise, the costs can become even more prohibitive. For instance, Genworth, one of the largest long-term care insurance underwriters, recently received state approval to increase premiums by 58% in Q1 2019. Similarly, the insurance company raised costs on average by 45% in 2018 and 28% in 2017.

Costs vary based on health

Health conditions can increase or decrease the cost of long-term care insurance. For example, older people with multiple health conditions pay more for coverage than younger, healthier individuals. Also, women pay more than men because they have more chances of needing long-term care assistance. Furthermore, women who are married are more likely to have lower premiums than single people. In addition, the cost of long-term care insurance may vary depending on which insurance company you choose.

Sub-standard rates

While predicting policyholder and service provider behavior is difficult, it is imperative that the insurance industry takes action in the event of rate increases. With a more conservative assumption base in today’s pricing and better speed at taking corrective action, the amount of future rate increases should be smaller. The “guaranteed renewable” contractual provision in many LTCI policies may also reduce premium rate increases.

Inflation riders increase benefits

There are several different types of inflation protection available on long term care insurance policies. The most basic form is simple inflation protection, which simply adds inflation interest to the base benefit amount. Most companies offer 3% or 5% simple inflation protection. It is also the least expensive option, but it will slow the growth of the benefit amount and may not keep up with the rising cost of long-term care. A more sophisticated inflation protection is compound inflation, which offers interest on interest compounding.

Tax-deductibility

Long-term care insurance premiums can be deductible, as long as they meet certain requirements. These include that the policy covers long-term care services and that the premiums are paid from an insured’s health savings account. Premiums must also meet a certain percentage of the insured’s adjusted gross income in order to qualify.

Choice of policy

A long-term care insurance policy is a great option for paying for assisted living, skilled nursing, or specialized care in a senior living community. It can provide substantial protection without depleting the surviving spouse’s or heir’s assets.