One of the more common questions I’ve gotten from clients over the past few years is whether or not they should maintain their long-term care coverage. The question isn’t surprising, both because carriers have increased premiums on some legacy policies substantially in recent years and because policyholders are reluctant to simply surrender a policy – and with it, the premiums they have paid into the policy over the years.

I have written previously about why premiums have risen and how to determine whether or not you should consider purchasing long-term care insurance. If you already have a policy and are trying to determine what to do in the face of increasing premiums, your approach to analyzing whether to maintain the policy should be slightly different. Start by looking at why you initially purchased the policy and determine whether or not that reason has changed.

Some of the largest premium increases we’ve seen are for policies that were purchased years ago. You might have purchased a policy some time ago when your investment portfolio was smaller and a long-term care need could have exhausted the portfolio. If, over the years since you purchased the policy your investment portfolio has grown substantially in value, you might now be able to self-fund or partially self-fund a long-term care need.

Another reason to purchase long-term care coverage is to preserve your own assets. In this case, being able to cover the cost of most long-term care isn’t as much of a concern as is leaving assets to a spouse, child or someone else. Extended timeframes can change needs here as well – your child may be financially secure and independent and your portfolio may have grown enough to meet the needs of you and your spouse. Thus, the long-term care policy may be more coverage than you need.

Once you’ve taken a look at your current needs, you can move on to looking at the long-term care insurers proposed increase. Quite often, when carriers propose an increased premium, they provide a set of options to limit the increase. You might be offered the option of taking a lower daily benefit for a lower premium, or the carrier might offer a reduced coverage period to limit the increase. In either case, understanding how your needs have changed since you took out the policy is key in determining how to the carrier’s proposed premium increase.