By Cyril Tuohy
New premium numbers released by the American Association for Long-Term Care Insurance (AALTCI) show that the average annual cost of $164,000 worth of long-term care insurance for a healthy 55-year-old single woman is $1,225.
By contrast, a 55-year-old man buying $164,000 worth of long-term care insurance comes to $925 a year, down 15 percent compared to last year, according to the AALTCI 2014 Long-Term Care Insurance Price Index.
The statistics are the first AALTCI numbers to report how much premiums have changed in the wake of gender-based pricing models that long-term care insurers began to use last year. These models account for longer life expectancies of women who use more long-term care.
In March, the AALTCI reported that a 55-year-old “single individual” purchasing $162,000 worth of current benefits long-term care could expect to pay $2,065 a year on average, according to the 2013 Long-Term Care Insurance Price Index.
Critics of gender-based pricing say the practice is discriminatory against women. Proponents say the practice simply reflects actuarial claims experience; women simply use more long-term care than men, and, for decades, carriers have priced life insurance based on gender.
Jesse Slome, director of the AALTCI, said that premiums are higher for women than they are for men. This is because long-term care underwriters say women constitute a higher risk of longer payouts on the long-term care insurance policy.
“Women account for two-thirds of the $6.6 billion in claims paid by insurers last year,” Slome said.
A 60-year-old couple each purchasing $164,000 of long-term care protection that will grow to $730,000 combined when both reach the age of 80, will pay out an average of $3,840 a year, the index also found. That is a 3 percent increase over last year.
Long-term care insurance carriers say they need to boost premiums to cover the cost of long-term care which is expensive and can last for many years. In addition, fewer long-term care carriers in the market compared with a decade ago means supply has shrunk.
Insurers contributing to the price index study included Genworth Financial, John Hancock, Mutual of Omaha, Transamerica, New York Life and Northwestern Mutual. Genworth was the first company to announce gender-based pricing for long-term care insurance.
Tracy Russo, a partner with the National Long-Term Care Education Center, said in a news release that insurers still offer choices in the form of discounts and options, and prices can vary from one insurer to another.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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