My wife purchased a long-term care policy many years ago, but within a few years the insurance company raised her rates so high that she could no longer afford it. By then she'd contributed several thousand dollars.
We're trying to determine whether the insurance provider will/must return any of the money she put into the account, and whether that activity (raising the rates to a point the purchaser can no longer afford the policy) constitutes grounds for a complaint. Unfortunately, we think it's a lost cause, and that the company simply walks with her money. While we think it's also disingenuous, we realize she may probably signed an agreement of some sort allowing this. Thoughts/Answers?
Can't remember who it was with, as she had a shady financial advisor---he was a real crook, and my folks were so gullible. {sigh}
In my parents' case, any premiums paid in not used will be refunded. In the case of my father (died in 2010), my mother received the $50,000 (? I think) in premiums paid for him. He never used any LTC.
The same thing will happen with my mother's policy, if she never ends up using it (or doesn't use more than she paid in). BUT my parents never stopped paying in; I don't know what would have happened if they had.
I think this is unusual, though. I doubt someone could get back premiums paid years ago on a lapsed policy.
Both my Dad and my Mom each had two (2) Long Term Care (LTC) Policies: one that had a “Return of Premium” Rider and one that did not. Since my Dad died at home in 2007 and was never in a nursing home, Mom received the entire premium that Dad had paid for the LTC insurance policy that had the “Return of Premium” Rider. Mom did not receive any return of premium from the LTC policy that DID NOT have the “Return of Premium” Rider.
According to https://www.thebalance.com/understanding-what-is-an-insurance-premium-4155239:
“The insurance company has to collect the premiums from many and make sure they save enough of that money in liquid assets to be able to pay the claims of the few. The insurance company will take your premium and put it aside, letting it grow for every year you don't have a claim. If the insurance company collects more money then what they pay in claim costs, operational costs and other expenses, they will be profitable.”
My Dad had LTC insurance, which was a comfort, when there was hope he would get out of the hospital but need respritory support to heal. Unfortunately we never got to use it, but having it was a comfort.
But uncontrollable increases in costs can become prohibitive. Let us know the outcome.
You might even do better than that. Recently, here in the UK, I was flabbergasted by a case where a woman who had freely entered into a credit agreement and then been unable to fulfil her obligations was not only relieved of her remaining debt but refunded those repayments she had made and was still apparently after compensation for the distress she had suffered. It takes quite a lot to make me feel sorry for an evil blood-sucking moneylender, but honestly - !
So. Stranger things have happened.
You will want to line up:
The LTC policy details - number, dates, premiums paid.
The terms explaining how premiums were to be varied. There will have been some, and your wife will have agreed to them. But if they are deeply buried and/or obscurely worded, it'll help. So find them.
Your request for a refund of the premiums paid. Are you asking for part, or all? What would you be content with?
If you are going to argue for your wife to be restored to the status quo ante, as though she had never entered into this benighted contract, you might actually do better to ask for all of it. And think about adding annual interest to compensate for what the money would hypothetically have earned had it not been swallowed up in a useless policy - it'll give you something to concede in negotiations.
I have to say, I can't approve. Your wife, a consenting adult, signed a contract - more than that, bearing in mind that it is true of *all* insurance that it is in fact a bet, she made a bet with her insurer, pulled out, and lost her stake. I personally feel that she ought to take this on the chin; and if you take a straightforward "caveat emptor" view of contract law, then that's the law.
But, again, stranger things are indeed happening. It might be worth a go.
Is there any suggestion that your wife was mis-sold this policy? Who was the insurer? Who sold the policy to her? What were the circumstances? What did she understand about the policy and its premiums at the time? How old was she? Was she given an opportunity to take advice before she signed the agreement?
I'm beginning to suspect that if you *can't* get the money back you're just slacking.
She may also genuinely have been weaselled into it by an utter slime-ball. In which case, good luck to you :)
Twenty years after my husband died ( he died young), I got any unexpected notice from the LTC insurance that he was owned money back and interest. I mention this to show that money back is a possibility.
Say you had home insurance for 40 years without making a claim and thinking “what a rip off, I should have gotten something for all those premium payments” but in fact you did get something – you were able to sleep nights knowing you had coverage if your house burnt down. You got what you purchased … piece of mind during the coverage period.
The wriggle room that seems to have been found in suits related to PPI and, I now see, in some class actions related to ltc insurance too seems to focus on the methods of selling but also the appropriateness of the cover to the people to whom it was sold.
The moral of the story should be, and always used to be, read the contract and understand what you're getting for your money before you hand it over. But the courts seem to be leaning ever more towards protecting consumers from wily financial services providers. Where will it end?!
If, at any time while she was paying for the premiums, your wife required long term care, the coverage would have kicked in for her.
If you pay the premium on your car insurance and you don't crash the car, the insurance company doesn't give you back the premium.
Many LTC policies have had to have big rate increases in recent years. Many companies have gotten out of the LTC business. People are living longer and the insurance isn't a very good business for them. There are a lot of hybrid products on the market now. You may want to talk to your agent about them.
ps- A few thousand dollars in LTC premiums isn't much at all. It's very expensive insurance because what it covers is very expensive. The coverage varies, but if your wife had a health issue that allowed her to make a claim, the insurance company could have been on the hook for $3000 or so a MONTH, for a period of years or, in some cases, for life.
Was the hefty increase in premiums an indicator of misrepresentation? Were the increases a breach of what she contracted for? You could get answers to those questions by asking an insurance lawyer in your state to read the LTC Policy and check on the laws in your state.
As others have posted here, you have to get up pretty early in the morning to beat an insurance company in court.
If you ever decide to check on LTC insurance in the future, remember that you do get a free look period that allows you to change your mind even after you sign the contract. From the Shopper’s Guide to Long-Term Care Insurance, published by the National Association of Insurance Commissioners:
If you decide you don’t want the policy soon after you bought it, you can cancel it and get your money back. You only have a certain number of days after you get the policy to tell the company you don’t want it. How many days you have depends on the “free-look” period. In some states the insurance company must tell you about the free-look period on the cover page of the policy. In most states you have 30 days to cancel, but in some you have less time. Check with your state insurance department.
https://www.ltcfeds.com/epAssets/documents/NAIC_Shoppers_Guide.pdf
Check the policy to see if there is a clause for Premium Refund at Death:
This benefit pays to your estate any premiums you paid minus any benefits the company paid. To get the refund, you must have paid premiums for a certain number of years. Also, some companies refund premiums only if the policyholder dies before a certain age, usually 65 or 75.
Posters here have pointed out how a Hybrid LTC policy combines Life Insurance with the coverage for risk of long term care, so survivors can get a death benefit if the policy isn't used up on care costs.
In my state, Massachusetts, LTC insurance policies have a unique exemption that protects the home from Medicaid estate recovery. LTC policies are different in every state.
I have been looking into Life Insurance & LTC. My current plan is that the lump sum, non- vested pension pays double at my death, thus giving my sons money for my burial....but would that be subject to Clawback?
Since the current balance with interest is $2025, and I can not to a partial withdrawal, I had to find an employer, who let's me work as an independent contractor, to meet Medicaid for Employed Person with Disability guidelines.
I don't want to save money, budget TP & stretch 1/2 tank of gas for a month, only to have it taken by Medicaid. I don't want to pay Insurance premiums to go to Medicaid, even if I avoid NH. I just started getting Waiver Services.
Your feedback would be appreciated. I currently live I Iowa. Waiting for Housing Vouchers. It took over 2 years for wait list to open. 80% of income goes to rent.
:-(
Trying to not be a burden. Only 61.