Difficult Choices for Some Long-Term Care Policyholders

He said he recently advised a 75-year-old California client with an unlimited lifetime benefit policy — meaning his pool of benefits never runs out — to ignore the settlement offer because his policy allowed a better way to manage costs. Mr. Robinson recommended that the client switch to a six-year benefit period and to cut his daily benefit amount to $300 from $546. His premium will be $2,340 a year instead of the $16,400 he is now paying, and he’ll still have a benefit limit of about $660,000. He can also invest his $14,000 annual savings to help cover future care. Even if Genworth wins approval for significant rate increases, Mr. Robinson said, the client would be afford to pay them, based on his lower rate.

“People have no idea they may have options,” Mr. Robinson said.

Here are some questions and answers about long-term care policies:

Where can I get help understanding a long-term care settlement offer?

The settlement offer includes a customer service number, but if you have a financial adviser or insurance agent you trust, seek their advice first, Mr. Robinson said. You also can try contacting your state’s federally funded State Health Insurance Assistance Program office, known as SHIP, Ms. Burns said. SHIP counselors can’t offer recommendations but may help consumers understand their options, she said.

The New York Times recently published a helpful guide to long-term care insurance.

How likely are state regulators to approve large premium increases?

Regulators must balance the need for a company to raise rates to pay claims and remain solvent with the need for policyholders to afford their coverage, Ms. Burns said. “It is a terrible struggle,” she said. Some states cap annual rate increases so that larger increases must be staggered over time.

Some regulators, like those in New York, are realizing that their previous increases may have been too stingy, given the magnitude of the problem. Also, Genworth has said that it may sue states that decline to approve “justified” increases.

My settlement letter has a deadline. What if I need more time?

Check with the customer service contact included in the letter, Mr. Robinson said. Deadlines vary, but he said he had found that some may offer grace period of at least 45 days on request.