STLH-128083911

RATE FILING SUMMARY

Individual Long Term Care Rate Revision
Company is proposing an overall rate increase of 37.0%
 

State Farm Insurance has filed for an average rate increase of 37% with the Vermont Department of Insurance. The actual increase will vary by issue age, benefit period, elimination period, and inflation option. This rate increase is being driven by lower lapses and mortality combined with policyholders’ total claims being projected to be greater than expected. In other words, more policyholders are maintaining their policies for longer than originally anticipated and updated data shows these policyholders will be claiming benefits more often and for longer than original assumptions would have projected. Although, this is a testament to the value of this coverage, it also has put unanticipated financial pressure on this block of business leading to the need for a premium rate increase.

Please note that due to the historically low interest rate environment, the company is currently experiencing lower than anticipated investment returns on premiums received. However, these investment losses are not being passed along to the policyholder, but are instead being fully absorbed by State Farm.

Most policyholders will be given the option to reduce coverage in an effort to mitigate the impact of the proposed increase. Only policyholders who have coverage greater than the minimum issue requirements will be able to exercise several options to reduce coverage, which include the following

• Reducing the daily benefit amount
• Decreasing the benefit period
• Increasing the elimination period
• Removing an optional rider

While the company recognizes that a rate increase is unwelcome, we feel it is necessary in order to fulfill our contractual obligations so that a policyholder’s benefits are available when they need them most. This rate increase represents the first long term care insurance rate increase that State Farm has filed within the state of Vermont. The filing complies with the regulations of the State of Vermont and will be subject to a comprehensive review process. Rate increases are subject to the review of the Green Mountain Care board and will not be implemented prior to all necessary approvals being received.

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