Kudos and many thanks to Jenna Carlesso and the Connecticut Mirror for publishing the recent ‘Priced Out’ series of three articles. We heard the words and saw the faces of real Connecticut people who are financially distraught because of the incessant and punishing long-term care insurance premium rate increases.
We also heard the words and saw the faces of the real people who have the power to drive necessary and positive change but, apparently, not the constitution to do so.
We, the policyholders, did nothing wrong to warrant such harsh treatment from the insurers but perhaps with one exception. We innocently but unknowingly placed our trust in their hands. Since we are Connecticut residents, we also naively believed in our hearts that the insurance industry was as solid as the ‘Constitution State’ itself. We were wrong.
As baby boomers, my wife and I were raised to take responsibility for our lives. As we approached our mid-life years, we sought a solution for our care in senior years should we not be capable of performing the activities of daily living. We purchased long-term care insurance policies from Monumental Insurance (now Transamerica) in 2004 with the understanding that the collective premium rate of $3,060 for two policies were “level-funded.” we thought we had secured our future and had met a life goal to not become a burden to family or the government in our elder years.
Fast forward to December of 2020. Seventeen years have elapsed since our long-term care insurance acquisition. During this time, the Connecticut Insurance Department approved four premium rate increase requests for Transamerica. Our collective premium rate was now $5,876 for two policies, an increase of $2,816 or an overall increase of 92% since inception.
In January of 2021, Transamerica informed us that our collective premium would increase as follows: $8,576 for 2021; $11,040 for 2022 and $12,526 for 2023. The insurance department had approved another three premium rate increases for Transamerica. This new collective premium rate of $12,526 for 2023, if accepted by us, would constitute a 309% increase since inception.
We panicked and accepted their “kind” offer to help us reduce our new premium as we were extremely frightened at the thought for how the premium rate for 2024 would devastate our household budget. By accepting Transamerica’s offer to reduce our daily benefit inflation protection from 5% to 1.98%, Transamerica reduced their future financial liability for our policies by approximately $330,000. We saved $14,500 on premiums over the three years.
Who did the the Insurance Department and State of Connecticut clearly favor with this transaction?
Therefore, our collective policy premium was held constant at $5,876 for two policies for years 2021-2023 but was raised to $7,038 in 2024 and will be raised to $7,656/$8,326/$9,056 for 2025, 2026 and 2027, respectively. We will most likely accept these amounts because we now know that Transamerica’s continued “kindnesses” would decimate our coverage.
By December 31, 2027, we will have invested $113,590 in premium payments since inception. Our collective annual premium payment will have increased from $3,060 to $9,056 or an increase in of $5,996 or an overall increase of 196% since inception.
Questions for Monumental/Transamerica and the CT Department of Insurance:
- Why did they not notify my wife and me about their knowledge that the industry was imploding because the industry had access to all of the numbers shortly after the turn of the new century (the early 2000’s)? Perhaps we might have made other plans if we had this information. Did they intentionally withhold it so that we would continue to make premium payments, making it more difficult for us to walk away from the dollars that had already been “sunk?”
- Why did they deploy a financial ‘scare tactic’ when they announced three years of premium increases (2021-2023) that would see our collective annual premium rate raised upward from $5,876 to $12,526.00? We perceive this to be nothing less than an aggressive financial attack on our future well-being. Their behavior was unacceptable; however, the insurance regulators must have believed otherwise.
- Why was Monumental/Transamerica able to deceive us about future premium rate increases from the beginning of our relationship in 2004 with little to no oversight by the Insurance Department? Their inference was that a 20% increase might be necessary over the life of this level-funded premium policy, but their prospectus clearly stated that the company had sold long-term care policies since 1991 and this policy nationwide since 2001 and that there have been no increases to date. Didn’t they mislead/deceive us?
- Transamerica’s most recent annual report is 2023. It reports Transamerica’s net revenues at $20.8 billion. The Insurance Department treats this organization as if they are too big to fail. In my opinion, they have received favorable treatment for too long. When is enough, enough?
Kenneth S. Kollmeyer of Farmington is a retired business executive.