The cost of premiums could jump
. Faced with a higher-than-expected number of claims, several major insurers have asked state regulators for permission to increase rates by 40% or more. Additional rate hikes are likely as thousands of baby-boomers who already have policies start filing claims, says Steve Robbins, a certified financial planner in St. Louis.
If a premium hike forces you to let the policy lapse, you'll lose your entire investment. There are ways to avoid that, says Jesse Slome, executive director of the AALTCI. If your policy provides unlimited coverage, you can avoid a rate hike by reducing the coverage to three or four years, which Slome says is sufficient for the majority of seniors. Reducing the annual inflation adjustment from 5% to 3% will also lower your premium.
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