Long-Term Care Insurance Industry Reports Struggles
Despite the potential benefits of long-term care insurance for many people, the long-term care insurance industry is facing significant challenges. Insurers have had to pay out higher than expected benefits. They have seen lower than expected returns on investments due to low interest rates. As a result, several major insurance companies, including Metlife, Prudential Financial, Unum Group, and Allianz are no longer writing new long-term care policies. Insurers remaining in the market are raising rates. According to the American Association for Long Term Care Insurance, new policies are already 20% more expensive this year than in 2012. Genworth Financial, the largest seller of long-term care insurance in the United States, recently announced it is hoping to get regulatory approval for between $200 and $300 million in rate hikes on all policies sold between 1974 and 2001. Adding to the industry’s problems, sales of new policies have been sluggish. Genworth reports that its sales for the first half of this year are only $83 million- less than 65% of what they were for the same period last year.
In addition to becoming more expensive, long-term care insurance policies are also becoming harder to get. Genworth announced earlier this year that it would tighten underwriting standards for new buyers. This means it will only approve policies for healthier customers. The company also plans to offer shorter benefit periods and lower daily benefits. In addition, it will be charging higher premiums for women, who are more likely than men to receive benefits.
Despite these problems, long-term care insurance can be a valuable planning tool. The cost of long-term care continues to rise. Many seniors can easily go through an entire lifetime of savings in a year to pay for it. Connecticut is the second most costly state to receive long-term care, behind only Alaska. The average annual cost of nursing home care in Connecticut is over $139,000 for a semi-private room. The cost of a private room can be significantly more than that. Long-term care insurance can act as a safety net for those hoping to protect their assets from these high costs.
It is important to consult an advisor familiar with long-term care insurance before purchasing a policy. You will need to look at all the benefits an individual policy provides, including the coverage period, the daily benefit amount, and the level of inflation protection. Each of the benefits provided will affect the cost of the policy. You will also need to consider issues like whether the policy will include coverage for assisted living facilities or home care. Depending on your age and whether you have already been diagnosed with any chronic medical conditions, you may not even be able to get coverage. If you have this type of health issue and are approved, you may have to pay higher premiums.
To maximize value to clients, long term care insurance should be considered within the context of comprehensive elder care planning. Your financial advisor should work collaboratively with an experience elder care attorney to minimize your cost and maximize the results that you and your family receive. To learn more about long term care insurance and how you might incorporate it into your elder care plans, call our office at 888-822-8778.
