After Her Long-Term Care Premium Climbs 70% by Age 81, She Will Cancel 21 Years of Coverage in Frustration. The Paid-Up Benefit She Could Walk Away From May Be Worth Every Premium Dollar She Ever Sent

She bought long-term care insurance at 60. She’s now 81, and after 21 years of premiums without a single claim, her bill is 70% above what she paid in year one. That 70% built up over several rate increases, and each notice bothered her a little more than the last one.

Imagine this policyholder holding the latest notice and reaching for the phone to cancel. That call could throw away the most valuable feature buried in her policy: a contingent non-forfeiture benefit that may let her stop paying and still keep a pool of coverage worth up to every premium dollar she ever sent.

How a 70% Cumulative Increase Unlocks Contingent Nonforfeiture

Contingent non-forfeiture sounds like legal fog, but the idea is simple. If a rate increase crosses the required threshold and the policy lapses within the allowed window, she may be able to stop paying without walking away empty-handed. The policy becomes paid-up with a smaller pool of benefits and no more premiums due.

Under the National Association of Insurance Commissioners’ (NAIC’s) long-term care insurance model regulation, a cumulative increase of 70% over the original premium triggers this protection for a policy issued at age 60, provided the policy lapses within the required window after the increase. The threshold depends on the age when she bought the policy. That’s why her issue age matters more than her current age. The protection covers policies bought without a separate nonforfeiture rider, which some buyers turned down to keep premiums lower.

Many states have adopted their own versions of the model, so the details depend on where she lives. Washington is one real-world example. Its rule ties the contingent benefit on lapse to the insured’s issue age and to the cumulative increase over the initial annual premium. It also uses the same 70% threshold for a policy issued at age 60 and lets the contingent paid-up benefit equal the total premiums paid.

Trading 21 Years of Premiums for a 100% Paid-Up Credit

She skips the higher premium, keeps her coverage from disappearing, stops paying, and holds onto a smaller but permanent pool of benefits. Under the NAIC model, that paid-up credit can equal 100% of the premiums she has paid, subject to the policy’s remaining benefit limit and her state’s rules.

If she later needs qualifying care covered by the policy, claims can be paid from that smaller pool until it runs out. Two decades of premiums haven’t disappeared; they’ve become a reduced amount of coverage she can still use. That fund matters because Medicare, the federal health program for people 65 and older, doesn’t pay for long-term custodial care. Medicaid, the joint federal-state program for people with limited means, generally steps in only after savings are largely spent.

Consumer advocate Clark Howard has warned listeners that with these policies, “the premiums are not guaranteed.” He describes insurers that “start raising the premiums to the point where they hope people leave and give up on their policy or agree to reduce benefits.” A policyholder who quits without claiming her paid-up benefit plays right into that pattern.

Read the Rate-Increase Notice Before Calling to Cancel

The option depends on two things: the rate-increase notice and when the policy lapses. The notice is where the insurer lays out the new premium and her choices. It’s dense, it’s dull, and it’s the most important piece of mail she’ll get from the company all year.

Timing decides everything. Under the model rule, the policy has to lapse within 120 days of the increased premium’s due date to trigger the contingent benefit. Before she simply cancels, she should ask the insurer in writing what she must do to elect the paid-up option and what benefit would remain. That’s one piece of insurance mail worth reading before it lands in the recycling bin.

Three Paths at Age 81: Pay, Shrink or Go Paid-Up

1. Absorb the higher premium. She keeps full coverage at an age when the odds of requiring care keep climbing. This works if her budget can carry the bill for years to come.
2. Reduce benefits. Insurers commonly offer to trim the daily benefit, cut the benefit period or drop inflation protection to keep the premium closer to its old level. She keeps paying, but she gets less coverage for it.
3. Take the contingent paid-up benefit. If it’s available, she stops paying for good and keeps a pool tied to what she’s already paid in.

Her health, family history, savings and likely length of care all shape the right answer. Someone with substantial savings and a modest expected care gap may be comfortable with the smaller paid-up pool. Someone who wants the largest possible cushion against years of care may decide the higher premium is still worth carrying.

The rate rise is the moment she most wants out. After 21 years, it’s also the moment a hidden exit benefit becomes most valuable. Before she picks up the phone, the best thing she can do is find out exactly what that exit pays and walk through it intentionally.

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