Dear John: Why extended care premiums are soaring
Dear John: In 2011, I took out long-term care insurance with Genworth Financial. My yearly premiums were $4,466.
This month I received notice from Genworth that it was raising my premiums by 60 percent, to more than $7,500.
I am still relatively young, 61, and am not sure how I can be expected to pay this amount going forward.
They have offered lower premiums if I were willing to accept a reduction in benefits. I am not really sure if it makes sense for me to continue with this policy.
Who regulates the long-term care insurance sector, and are these recent increases happening across the board? M.A.
Dear M.A.: I contacted Genworth, and it is pleading poverty. Claims were higher than the company expected, it is suffering losses, and therefore it is tapping policy holders. Boo-hoo!
If it makes you feel any better, I, too, got a big premium rate hike on my LTC insurance.
But it seems obvious to me that the older people get — and, therefore, come closer to using the benefits from these policies — the bigger a risk they are. It may also be that the companies don’t want to keep these big risks as customers.
Anyway, here’s the part of Genworth’s statement about your policy I think is really special:
“Most [LTC] insurance carriers have had to raise premiums because of higher-than-anticipated claims costs, which have resulted in billions of dollars of losses,” the company said. “Because [LTC] insurance is a guaranteed renewable product, carriers cannot cancel or change the policies.
“No one likes rate increases, but they are necessary to ensure carriers’ ability to pay claims in the future,” Genworth said.
Of course the company likes to raise premiums. It increases profits, or cuts losses. If it were so traumatic to raise them, it wouldn’t do it.
This inequity needs to be fixed. And states need to investigate the legitimacy of LTC policy premium increases.
Dear Readers: In my Jan. 23 column, I addressed the rising costs of college textbooks and the convenient theme of updating the textbooks just enough year to year to force the next class to buy higher-priced new books and not used, marked-down editions from the prior class.
I called this a bit of a scam perpetrated by professors and book publishers.
Well, as expected, the publishers cried foul. Here’s their story:
Dear John:
Your reader L.K. is right: Print textbooks are expensive. Higher education learning companies understand the burden this puts on students and their parents and have been working hard to provide lower-cost solutions and more effective learning programs. College is an investment that starts to pay off when students graduate; the best solutions are materials that improve graduation rates.
Today’s instructional resources are increasingly delivered online, with a print option for those who prefer it. These online resources now typically cost less than half of what a textbook costs and many have a loose-leaf version available at a reasonable cost.
According to the Book Industry Study Group, the number of students who have been assigned a fully digital learning platform instead of print materials or bundles increased from 10 percent in 2014 to 40 percent in 2015. When a professor shifts from print to digital, the price is cut about in half. More important, students who use digital platforms typically get better grades.
Digital learning includes personalized learning technologies such as quizzes, problems and games that assess where students are doing well and where they need help. A study of more than 700 students at six colleges found these platforms increased student performance by a full letter grade.
The US Department of Education recently issued regulations approving University Student Discount Programs, in which colleges and universities work directly with digital-learning companies to help reduce the cost of materials while ensuring students have materials by the first day of class. The University of California, Davis recently piloted one of these programs, and achieved savings ranging from 26 percent to 70 percent over the cost of print materials.
Learning companies continue to work to provide alternative solutions that reduce costs and enhance the learning experience. We understand that devices and software require investment, but by shifting from print to digital and taking advantage of university student discount programs, costs can be reduced by as much as 70 percent.
David E. Anderson
Executive director of higher education, Association of American Publishers
Dear Readers,
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