A rate increase is a change in the premium or cost structure of an existing insurance policy or block of policies, typically resulting in higher charges to policyowners. In the life and annuity world, the term often applies to long-term care, disability income, or certain universal life and no-lapse designs where carriers are allowed, with regulatory approval, to adjust charges for in-force contracts based on emerging claims experience or interest rate environments. Rate increases may be implemented across a class of policies by issue age, state, or series, and can significantly impact affordability, persistency, and client satisfaction. Even when actuarially justified, rate increases can create trust and reputational issues if they are frequent or sizable.

In practice, carriers notify policyowners and advisors when a rate increase is approved, providing new premium options or benefit reductions to mitigate cost. Advisors play a key role in helping clients understand why the increase is occurring, what alternatives exist (such as reducing benefits, shortening benefit periods, or adjusting riders), and whether to maintain, modify, or surrender coverage. For new sales, the history of rate increases on older blocks of business may influence carrier selection and how advisors explain product risks. Compliance and communication teams craft letters, FAQs, and training to support consistent messaging. Handling rate increases thoughtfully can preserve relationships and maintain coverage that still meets critical needs.