The market for long term care insurance may present new opportunities on the horizon, with premiums bound to increase as fewer market participants and more potential beneficiaries enter.
Long term care insurance is becoming more expensive as industry mainstays have recently stopped writing new policies, writes columnist Mark Miller in a Reuters column this week.
With Genworth Financial among those providers reassessing their long term care insurance participation and pricing, the market is due for a shift, Miller writes, making it more difficult to obtain—and pay for—long term care.
With Genworth executives stating recently that the company is conducting a review of all aspects of its LTC insurance business, there are some onlookers who are predicting the company’s exit from the market, Miller writes, though Genworth refutes the claim.
“Indeed, it’s far more likely the company is trying to set the table for improving business conditions over the next few years, the result of three key factors,” he says, noting a rise in interest rates; more realistic lapse rate assumptions; and rising demand along with less competition.
Given the companies paring down their interest in the business, it could create an opportunity for those who remain in the business, which will allow them to charge more for the insurance plans.
“New policies already are 20 percent more expensive this year than in 2012,” Miller writes, citing data from the American Association for Long Term Care Insurance.”The average annual premium for a traditional LTCI policy covering a 55-year-old couple is $2,580 this year, the group says. And single women now pay 40 percent to 50 percent more than single men due to new gender-based pricing major carriers are rolling out.”
Rates may jump, leading holders of the insurance left to renegotiate or change plans.
“The carriers that are still in the market understand what the real experience has been, and they can price that into their policies,” Marc Cohen, chief research and development officer at LifePlans, told Reuters.
Written by Elizabeth Ecker
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Obviously, LTC insurance is for the very well-to-do, serving as a secondary backup to protect assets in the future. Nothing wrong with that, so long as society sees LTC insurance for what it is, and does not regard it as a LTC solutions for the 90%. The industry seriously miscalculated its actuarial fundamentals, and is rapidly losing its relevancy to middle class elderly and their families.
Hopefully the LTC Commission now concluding its work in Washington will acknowledge this situation, and offer a "Plan B" for log term services and supports, integrated with the Affordable Care Act and Older American Act reauthorization.
Rates may increase, but the cost of a policy will still save you thousands of dollars in the long run should you ever need care. Even if you don't need care, you will have hedged your risk against an increasingly common problem.
Premiums vary widely based on company, so doing your research ahead of time and working with an independent agent are key. Compare different costs at http://www.comparelongtermcare.org/ and be sure to get Inflation Protection – it will increase the value of your plan over time.
Good luck!
Rachel M
Compare LongTermCare
This shows that long term care insurance cost is expensive http://www.ltcoptions.com/long-term-care-insuranc… with the cost ranging from $1,000 to $7,000 each year. This cost will continue to increase and to avoid this price hike, it's highly recommended for people to explore their other options. Instead of purchasing traditional long term care insurance, you can consider life insurance. You can also try accelerated benefits, viatical settlements, life settlements and more. If you really can't afford coverage, there are long term care programs that are more than willing to lend you a hand in paying for your long-term care expenses such as in-home care and senior care communities.
Let's face it: LTC is not financially feasible — just one more wishful-thinking scam us baby boomers (me included) want to believe and feel like we deserve. Do the math. If at 50 you pay 3K a year for a policy, at 70 when you might need this kind of care, you've paid 60K. Even in a bull market, that doesn't begin to cover the costs of full-time care. Where is this money supposed to come from? Of course insurers will add loophole after loophole. And they are in business NOT to pay out on any policy if the can help it. Insurance agencies are NOT OUR FRIENDS. They lie. As someone at the end of the boom, I'm betting it will be pretty dire for us by the time we're in our 70's and 80's.