1. Why do insurance companies seek increases on inforce long-term care insurance policies?
When the premium rates for long-term care insurance policies are initially set, insurers make assumptions about what will happen over the time period between when policy owners purchase, and ultimately use, their policies. These initial assumptions are intended to help ensure that the premiums collected over time, plus any interest earned, will sufficiently cover expected claims.
However, policy owners do not generally submit claims for decades after purchasing long-term care insurance, so these initial assumptions are made looking many years into the future.
While New York Life used initial assumptions that we deemed to be reasonable at the time these policies were priced, certain assumptions did not turn out (or are not expected to turn out) as originally anticipated. As a result and after careful consideration, we determined that we needed to make changes to the premiums on existing policies in order to cover the expected claims.
2. Is there a provision in my policy that allows you to raise my premiums?
First and foremost, we cannot change premiums for specific policy owners due to individual circumstances.
In general, we may implement premium increases on a class of policies that are issued in the same state on the same policy form. Please review the first page of your policy for specific information regarding premium rate changes.
In addition, long-term care insurance is a "guaranteed renewable" product, which means that as long as you continue to pay the premium, we cannot cancel or change your policy, other than to adjust premiums as necessary.
In order to increase premiums, we need to submit actuarially justified requests to the insurance regulators in each state (with the exception of Alaska) where the policies were sold. Because each state regulator may have different criteria for allowing an increase, the amount and timing of each increase varies by state. In states where we receive less than we requested, we reserve the right to submit a subsequent request for an additional premium increase. As such, in 2021 we started the process of requesting additional increases in states that approved less than the full amount of our request with the goal of receiving the full premium increase originally requested. We believe this approach will allow us to treat policies in all states similarly.
3. If I am subject to an increase, when will I be notified?
As increases are subject to regulatory approval in most states, the timing of when policy owners are notified and when increases take effect will vary by state and policy owner. The first policy owners receiving an increase were not notified until the first quarter of 2021 and the first increases didn't take effect until the second quarter of 2021. All policy owners receiving an increase will be notified by mail approximately 90 days before the increase takes effect on their policy anniversary. The entire process (of implementing all increases in all states) is likely to take several years.
4. Should I make changes to my policy now in anticipation of this potential increase?
We recommend you do not make any changes to your policy related to this increase until you receive the official notification letter confirming that your policy is subject to a premium increase and informing you about the amount of any premium increase.
5. If I am subject to an increase and want to keep my policy but reduce the impact of the increase, what can I do?
Included in the notification package, you may find a Benefit Reduction Option Worksheet and Request Form (if applicable) outlining one or two benefit reduction options and the corresponding premium. To choose one of these options, simply complete, sign, and return the ‘Benefit Reduction Request Form’ per the form instructions. There may be other reduction options available to you in addition to those included with the letter.
For certain policies, a Benefit Reduction Option Worksheet and Request Form may not be included with the notification letter due to the current policy design. If your letter does not include a Benefit Reduction Option Worksheet and Request Form, you may still be able to reduce the impact of the increase by electing certain benefit reduction options.
In either case, your agent or a member of our LTC Premium Change Customer Care team will be available to help you explore the benefit reduction options that best meet your needs.
6. Who can I contact for more information about how this increase may affect my policy?
Once you receive your policy owner notification letter which outlines the details of your increase, your agent will be able to answer your questions and walk you through your options. You may also speak with a member of our LTC Premium Change Customer Care team at 1-800-890-7798 Monday to Friday 8am to 6pm CST. Until you receive an increase notification letter, we will only be able to discuss the premium increase in general terms.