Long-term care insurance can still face future premium increases
A guaranteed renewable long-term care policy can still get more expensive later, and some policyholders have faced steep hikes. Buyers need to check renewal and rate-increase rules before signing.
A long-term care insurance policy labeled “guaranteed renewable” can still get more expensive later. That is the trap many buyers miss: “guaranteed renewable” usually protects the right to keep the policy in force if premiums are paid, but it does not lock in the price forever.
Premium increases are a real feature of the market, especially on older blocks of business. For shoppers, the key issue is not whether the insurer can cancel the policy easily. It is whether the premium can rise enough to force a hard choice later.
Why guaranteed renewable does not mean fixed-price
Under Massachusetts’ long-term care insurance rules, guaranteed-renewable policies can still have rates increased in the future. Guaranteed renewable means the insured has the right to continue the policy in force by paying premiums on time. That protects coverage, but not the price.
Washington draws the same distinction. A long-term care policy can be guaranteed renewable, yet insurers can still revise rates for an entire class of business if the filing is approved. Those class-wide rate changes must be filed.
Why premiums can rise after purchase
The NAIC has treated long-term care pricing as a structural problem for years. In a June 2, 2016 issue brief on premium rate increases on private long-term care insurance policyholders, and again in materials discussed at the NAIC Long-Term Care Insurance task force meeting on Aug. 12, 2022, it highlighted a basic mismatch in the product design. Traditional long-term care insurance uses level premiums to pre-fund a cost that rises over time, which makes the product vulnerable when claims or assumptions change.
The 2022 task force discussion drew on interviews with financial planners who had clients notified of rate increases. Those interviews found policyholders were sometimes pushed into one of three corners: pay more, accept reduced benefits, or let the policy lapse.
The NAIC published a shopper’s guide in 2022 to help consumers understand both coverage and the risks of long-term care insurance.
How state regulators try to limit the damage
States do not let insurers raise rates casually. New Hampshire regulations limit long-term care premium increases to 20% a year, although a company may receive approval for a larger increase that it must implement. That means a policyholder may still face a substantial jump even in a state with a stated annual limit.
California requires the Insurance Commissioner to annually prepare a Consumer Rate Guide for long-term care insurance. California also has consumer information warning that premium increases may be tied in part to the benefits purchased.
Virginia maintains a consumer page on long-term care insurance rate increases as well. Across states, rate increases are typically reviewed and approved by insurance departments, not applied arbitrarily.
What recent increases show
A California consumer-oriented legal page cited a 79.4% premium increase for existing policyholders in 2024, with a $1,536 annual premium in 2023 soon becoming much higher.
California Health Advocates warns that people may receive notices that premiums are increasing, and that the increase can depend partly on the benefits purchased. A comprehensive policy that pays benefits for five years will usually have a different premium impact than a shorter or less generous policy. In practice, richer benefits can mean greater exposure to future pricing changes, especially if the original premium was set too low for the risks the policy eventually had to absorb.
What to ask before you buy
Before you commit, check the contract for the terms that matter most:
- Is the policy guaranteed renewable, and if so, does that only protect coverage rather than the premium?
- Who must approve any rate change, and is the increase applied to a class of business or to the policy alone?
- Has the insurer raised premiums on this product before, and by how much?
- How would your budget handle a 20% increase in one year, or a much larger approved increase over time?
- Are reduced-benefit options available if you later cannot afford the original premium?
- How do the benefits you choose, such as five years of coverage, affect the chance of future rate pressure?
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