Apr 2nd, 2014
The Connecticut Department of Insurance has rejected more applications for Long Term Care Insurance rate increases, this time for MetLife Insurance Company of Connecticut.
MetLife in Connecticut
etLife submitted applications for 13 separate rate increases on Long Term Care Insurance policies in the state of Connecticut. Those applications were disapproved this week, as reported by LifeHealthPro, when the state determined the rate increases are not necessary and do not fall in line with the experience thus far within the state.
The premium increases were requested for individual Long Term Care Insurance policies, which cover the cost of care received in a nursing home, assisted living facility, and often at home by a home health aid. Many providers have been seeking rate increases to help balance the heavy losses they expect to occur from new claims on these types of policies. MetLife says the company expects claims costs to be much higher than originally projected when the policies were priced, but the Connecticut Department of Insurance didn’t agree the reasoning was sound.
The rate increases requested ranged from 50% to 100% increases and would have affected close to 11,000 policyholders throughout the state. Connecticut has been fairly strict on the rate increases they have allowed, pointing to lower claims costs within the state compared to the national average and the fact that bad experience has been relatively rare.
"Unlike medical health insurance with premiums set to cover expenses incurred only during the upcoming policy year, long-term care premiums are set to cover expenses that are not expected to occur until a distant date, sometimes 20 years in the future," Connecticut insurance officials wrote in the notice announcing the disapproval.
Long Term Care Insurance Cost
Long Term Care Insurance providers have run into some issues in the past several years trying to reconcile the higher than expected claims rates and low interest rate environment with the relatively low premiums included in the initial pricing of policies. Many have been forced to ask for rate increases in order to avoid huge financial losses and attempt to remain solvent.
One of the top companies in the market, Genworth, has announced a new approach to rate increases that includes smaller rate increases at a more frequent rate, which is more manageable for both the consumers and the carriers. Even with the large rate increases, though, Genworth CEO Tom McInerney says most policyholders are accepting the rate hikes to hold onto their policies, most of which are of huge value. Many of the policies undergoing large rate increases include unlimited benefit periods, which are no longer marketed or sold because they are much too costly to providers and doesn’t provide a good balance of cost and benefits.
Read more about planning for the risk of long term care here. Long Term Care Insurance is an important tool for retirement planning, but the decision to buy should be an informed one, which is why we do our best to educate consumers about all the aspects of this type of insurance. We will send you a comparison of the top companies and policies in the mail, for you to look over on your own time with no pressure to buy. Request your quote today.