August 5, 2026
9:47 pm

Your Long-Term Care Premium Went Up Again

Before you drop a long-term care policy over a rate increase, understand that the insurer is required to offer you landing spots — reduced benefits at the old premium — and that in many cases a contingent nonforfeiture benefit lets you keep paid-up coverage equal to the premiums you have already paid. Lapsing outright, after fifteen or twenty years of payments, is almost always the worst of the available outcomes.

Rate increases on older long-term care blocks are not a scandal so much as a correction. Policies sold in the 1990s and 2000s were priced on assumptions that proved badly wrong: insurers expected far more policyholders to lapse, expected higher investment returns, and underestimated how long claims would last. Increases must be filed with and approved by each state’s department of insurance, which is why the same policy can be raised in one state and not another.

This page explains the choices in front of you, what each one actually costs in coverage, and where an unneeded life insurance policy can be used to keep long-term care coverage in force rather than surrender it. Pine Lake Life Solutions offers a free, no-obligation policy review; this is education, not insurance, legal, or tax advice.

In This Article

Why the Increase Happened
The Landing Spots Your Insurer Must Offer
Contingent Nonforfeiture: The Option Nobody Explains
Running the Keep-or-Cut Analysis
Using a Life Insurance Policy to Keep Coverage in Force
All the Options, Ranked
When Cutting or Dropping Is Actually Right
Frequently Asked Questions

Your Long-Term Care Premium Went Up Again

Why the Increase Happened

Three pricing assumptions failed at once. Insurers assumed a meaningful share of policyholders would lapse before ever claiming; actual lapse rates on long-term care coverage turned out to be a fraction of that, because people who buy it keep it. They assumed higher long-term interest rates on reserves; the rate environment after 2008 was nothing like the pricing model. And they underestimated claim duration, particularly for cognitive impairment.

The result was a wave of rate increase filings across the industry, and the exit of most carriers from the standalone market. Any increase you receive had to be filed with and approved by your state’s insurance department — which is also why your neighbor with an identical policy in another state may have received a different percentage or none at all. The filing is a public record; your state DOI can tell you what was approved and when.

The Landing Spots Your Insurer Must Offer

When a carrier raises rates, it generally offers alternatives to paying the higher premium. The common ones, each of which cuts a different part of the benefit:

Reduce the inflation protection. Dropping from 5% compound to 3% compound, or to simple inflation, or freezing the benefit at its current level. This is usually the biggest lever and the most consequential loss, because inflation protection is what makes a policy purchased at 60 still useful at 85.
Reduce the daily or monthly benefit. Keeps the years of coverage but lowers the amount paid per day.
Shorten the benefit period. Going from unlimited or six years down to three or four.
Lengthen the elimination period. From 30 or 60 days to 90 or 180 days, meaning you self-fund longer before benefits start.

Ask the carrier for a written illustration of each option with the new premium and the projected benefit pool at ages 80, 85, and 90. Comparing pools at age 85 is far more informative than comparing today’s premium.

Contingent Nonforfeiture: The Option Nobody Explains

Under the NAIC’s long-term care model regulation, adopted in some form by most states, a substantial rate increase can trigger a contingent nonforfeiture benefit. The trigger is defined by a table of cumulative percentage increases keyed to the issue age — smaller percentages trigger it for older issue ages, larger ones for younger.

If it is triggered and you elect it, the policy converts to paid-up status with a benefit pool generally equal to the total premiums you have paid, with no further premiums due. For someone who has paid $60,000 over two decades, that is $60,000 of paid-up long-term care coverage rather than nothing. It is far less than the original policy promised, but it is dramatically better than lapsing.

Whether this applies to your policy depends on the contract, your state’s adoption of the model regulation, and the size of the cumulative increase. Ask the carrier in writing whether contingent nonforfeiture is available on your policy, and confirm with your state’s department of insurance if the answer is unclear.

Option	Premium Effect	Coverage Effect	Consider When
Pay the increase	Higher	Unchanged	Strong inflation protection and long benefit period
Reduce inflation protection	Back near old level	Large loss at ages 85+	Last lever to pull, not the first
Shorten benefit period	Lower	Fewer covered years	Other assets can cover a long stay
Lengthen elimination period	Lower	Longer self-funded window	Liquid savings can cover 90-180 days
Contingent nonforfeiture	Zero	Paid-up pool near total premiums paid	Increase is large enough to trigger it
Fund premium via life settlement	Unchanged	Unchanged; life death benefit ends	An unneeded life policy of roughly $100,000+ exists

Contingent Nonforfeiture: The Option Nobody Explains

Running the Keep-or-Cut Analysis

The right comparison is not premium versus premium; it is expected benefit versus expected cost. Estimate the annual premium at the new rate, multiply by the years you expect to pay it, and set that against the benefit pool the policy would provide at the age when you are statistically likely to claim.

Then compare against self-funding the same care. With assisted living running in the neighborhood of $5,500 to $6,000 a month nationally and nursing home private rooms near $10,000 a month in recent Genworth surveys — confirm the current figures — a policy that still pays $200 a day with compound inflation is carrying real weight. A policy frozen at $100 a day with no inflation protection, twenty years from a likely claim, is carrying much less.

Also check whether the policy is tax-qualified under IRC section 7702B, since premiums on qualified contracts may count as deductible medical expenses subject to age-based limits, and qualified benefits are generally received tax-free. That changes the after-tax cost of keeping it.

Using a Life Insurance Policy to Keep Coverage in Force

Here is the angle families miss. If the household also owns a life insurance policy that is no longer needed — the kids are grown, the mortgage is paid, the estate tax exposure that justified it is gone — that policy can fund the long-term care premium rather than being surrendered for a fraction of its value.

Two mechanics exist. A life settlement converts the unneeded policy to a lump sum; the federal market study (GAO-10-775) found sellers typically received about 10% to 35% of face value, roughly four to eight times cash surrender value. Buyers generally look for a death benefit of about $100,000 or more on a senior or health-impaired insured. Proceeds can then prepay years of long-term care premium at the higher rate.

Alternatively, since the Pension Protection Act provisions took effect in 2010, a tax-free exchange under IRC section 1035 from a life or annuity contract into a qualifying long-term care contract has been possible. That repositions value rather than producing cash, and new underwriting typically applies — a real obstacle for anyone whose health has changed.

All the Options, Ranked

1. Contingent nonforfeiture, if triggered. Paid-up coverage roughly equal to premiums paid, zero ongoing cost. Ask about it first.

2. Reduce benefits and keep the policy. Usually better than dropping it. Cut the benefit period or lengthen the elimination period before you gut inflation protection.

3. Pay the increase. If the policy still carries strong inflation protection and a long benefit period, it may remain the best value on your balance sheet.

4. Fund the premium from an unneeded life policy. A settlement on a policy you no longer need can keep a policy you very much do need.

5. 1035 exchange into a hybrid contract. Worth exploring with a licensed agent, subject to underwriting.

6. Lapse. The last resort. Everything you paid is gone and coverage ends. Before doing this, confirm in writing that no nonforfeiture benefit is available.

When Cutting or Dropping Is Actually Right

Sometimes it is. If the benefit pool is small, inflation protection was never purchased, and the premium now consumes a meaningful share of a fixed income, the policy may no longer earn its cost — especially if the household would qualify for Medicaid relatively quickly anyway. Paying $4,000 a year to protect a $90,000 benefit pool that would cover nine months of care is a defensible thing to walk away from.

Likewise, if the policy is one a state partnership program does not recognize and there are no meaningful assets to protect, the asset-protection rationale is thin. Just do not lapse without first getting the nonforfeiture answer in writing, and do not surrender an unneeded life policy to the carrier without first learning what the secondary market would pay.

To find out, all that is needed is the life policy’s cover page — the first page showing the insurer, policy number, face amount, and issue date. Pine Lake Life Solutions provides a free review at (305) 209-7183 and is not a law firm, insurer, or investment advisor.

Frequently Asked Questions

Why do long-term care insurers keep raising premiums?

Original pricing assumed far higher policy lapse rates, higher investment returns, and shorter claim durations than actually occurred. Carriers have filed rate increases to correct those assumptions, and each increase must be approved by the state insurance department. That is why the same policy can be raised in one state and not another.

What is a contingent nonforfeiture benefit?

Under the NAIC long-term care model regulation adopted by most states, a large enough cumulative rate increase can let you convert the policy to paid-up status with a benefit pool generally equal to the premiums you have paid. The trigger percentages vary by issue age. Ask your carrier in writing whether it is available on your contract.

Which benefit should I cut first?

Most advisors suggest lengthening the elimination period or shortening the benefit period before reducing inflation protection, because inflation protection is what preserves the policy’s value at ages 85 and beyond. Ask the carrier for written illustrations of the benefit pool at ages 80, 85, and 90 under each option. Compare pools, not premiums.

Can I sell a long-term care policy?

There is no meaningful secondary market for standalone long-term care insurance, unlike life insurance. What can sometimes be sold is a life insurance policy you no longer need, with proceeds used to keep the long-term care coverage in force. Those are two different contracts and two different markets.

Can a life settlement pay my long-term care premiums?

Proceeds are yours to use as you choose, so they can prepay years of premium. The GAO market study found sellers typically received about 10% to 35% of face value, roughly four to eight times cash surrender value. Buyers generally want a death benefit of about $100,000 or more on a senior or health-impaired insured.

Is a 1035 exchange into a hybrid policy worth exploring?

It can be. Since the Pension Protection Act provisions took effect in 2010, tax-free exchanges from life or annuity contracts into qualifying long-term care contracts have been permitted. New underwriting usually applies, which is a real obstacle if health has changed. Discuss it with a licensed insurance professional.

Are long-term care premiums tax deductible?

Premiums on tax-qualified contracts under IRC section 7702B may count as deductible medical expenses subject to age-based dollar limits that are indexed annually. Benefits from qualified contracts are generally received tax-free. Confirm the 2026 limits and your own deductibility with a CPA.

What if I simply cannot afford it anymore?

Get the nonforfeiture answer in writing before lapsing, and ask the carrier for every reduced-benefit option with illustrations. If a life insurance policy in the household is no longer needed, a free review can tell you what the secondary market might pay. Call (305) 209-7183; there is no obligation.

Find out what your policy is worth — free, confidential, no obligation.

A 15-minute educational review covers your eligibility, every alternative, and a realistic view of what each path would net you.

Call (305) 209-7183 · Request a review online →

Table of Contents