In general, people purchase insurance policies as a safeguard against life's uncertainties. Because of this, it's generally not welcome when the status of the policy could be up in the air. Over the last several years, the market for long-term care insurance has been anything but stable, which may prove concerning for many people.
Paying for care in an assisted living or nursing facility is a major financial investment. In order to spread out that cost -- or drastically reduce it -- people might be interested in purchasing an insurance policy. This is a decision made with the knowledge that a person may never actually need long-term care, but an insurance policy appears to be a line of security.
According to a recent report from the Philadelphia Inquirer, the environment for long-term care insurance has been quite unpredictable. At one point, but many insurance companies offered long-term care policies. An observer points out that the last 15 years or so have ushered in remarkable change. Up to this point, a number of insurers have left the long-term insurance marketplace entirely.
As a result of this uncertainty, insurance premiums have increased rapidly. For example, companies in Pennsylvania have reportedly requested to raise rates by as much as 100 percent. However, regulators have not approved increases this large.
Keeping all of this in mind, it's important to have a plan in place for the possibility of long-term care. Given the high cost of residency in a facility and the rising cost of insurance premiums (for those who maintain a policy), earnest efforts to plan ahead could wind up preserving a large share of an estate's assets. In turn, an individual's surviving family members wouldn't have to be concerned about major liabilities when he or she passes away.
Source: The Inquirer, "Costs rising for vital long-term care insurance policies," Harold Brubaker, May 11, 2014