How to Determine the Value of LTC Insurance After Rate Increases

A consumer just asked me what happens if a long-term care insurance company goes bankrupt.  Her next question was really loaded.

What if you were told that your premiums would never go up and they have increased so much in the past 11 years (from $69 to $189) you can no longer afford the premiums?

She wanted to know if she can cancel her policy and get the $13,000 back that she has paid in. You can see my full response in the FAQ section of, but here is the essence.

She can’t cancel and get  her premiums back, but I hope I helped her feel better about her situation. She has paid $13,000 in premium over 11 years. She is in Idaho and I wanted her to realize the cost of care in Boise, ID is about $200 a day for 10 hours of home care and $224 a day for semi-private care in a nursing facility.  Even assisted living facility is around $3000 a month. So the premium she has paid over 11 years would only pay for a couple of months of daily home care or nursing home care at current costs or four months in an assisted living facility. I don’t know what her benefits are but I’m sure they would pay for much, much more than that if she has a claim, and her premium should stop when she starts receiving benefits.  Without her policy, Medicaid in Idaho will pay if she spends down her assets to $2000 and if she is married, her spouse could only keep half of their assets up to a maximum of about $110,000 this year. Her choice of care under Medicaid will likely be more limited than if she uses her long-term care insurance benefits to pay for her care.

As for the bankruptcy question, there is a state guaranty fund in each state that may provide help for an insolvent insurance company, but these funds have been rarely tapped for long-term care insurance. Many more banks have gone under than insurance companies.

In summary, any time you are doubting the value of your long-term care insurance plan, compare the premium you have paid in with the current cost of care in your area. (See the Cost of Care section on this site.)

I think you will see the premium is a much better deal.



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