Kiplinger.com columnist Kim Lankford recently wrote that
MetLife, one of the largest providers of long-term-care insurance,
will stop selling long-term-care policies
. She also said two other long-term-care insurance providers have
proposed premium hikes for current policyholders. That's because
the companies are getting more claims than they expected and need
more funds to pay them.
Naturally, the fact the insurers are raising long-term rates or
getting out of the business entirely has policyholders worried.
However, there are ways for people to guarantee that their
long-term-care premiums won't rise. Kim Lankford explains how in
the January issue of
Kiplinger's Personal Finance
Traditional long-term-care insurance policies always carry the
risk that rates will be raised in the future. However, most
insurers offer versions of their policies that charge higher
premiums upfront but are paid in full after ten years of by age 65.
After that, the insurer cannot raise your rates. These policies,
sometimes called ten-pay policies, require a big initial investment
and tend to be appropriate for people who have a large chunk of
retirement savings on hand. A new law that took effect in 2010
permits tax-free transfers -- know as 1035 exchanges -- from an
annuity to pay long-term-care premiums.
You can also get a guarantee that rates won't rise with a type
of policy that has an upfront payment and combines long-term-care
protections with life insurance or annuities. For example, if a
healthy 65-year-old invests $100,000 in Lincoln Financial's
MoneyGuard policy, she can get more than $83,000 per year of
long-term care for up to six years (totaling nearly $500,000). If
she never needs care, her heirs will receive a $166,407 death
benefit. And if she needs to tap some, but not all, of the combo
policy for care expenses, her heirs will inherit whatever remains
of her original investment.
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