Long-term care insurance carriers paid out $8.15 billion in claim benefits to policyholders in 2015, an increase of nearly 4 percent over 2014, according to the American Association for Long Term Care Insurance.
About 260,000 individuals received long-term care insurance benefits last year, up from the 250,000 individuals who were recipients of a long-term care benefit in 2014, the association added in a news release.
“Americans are living longer and often the result is a need for long-term care,” said Jesse Slome, director of the AALTCI in a statement. “The individuals who own long-term care insurance policies benefit from the protection, as do their families and loved ones."
LTCi policies typically pay policyholders a sum to reimburse them for expenses associated with long-term care. An LTCi policy kicks in when policyholders cannot meet some of the activities necessary for daily living.
Over the past few years, LTC policyholders have been hit with price increases as long-term care carriers struggle to remain profitable on the insurance line.
Before the financial crisis, which ushered in an era of interest rate declines, carriers underwrote long-term care policies with generous benefits. They later themselves paying huge claims brought on by rising health care costs.
In a series of fourth-quarter 2015 earnings calls over the past two weeks, life insurance executives said they would continue to ask for price increase on in-force LTCi policies.
Many regulators have approved the rate hikes as every premium dollar used to pay for private long-term care coverage means one dollar less spent on public, taxpayer-funded long-term care programs like Medicaid.
2016 LTCI Price Index Drops 9 Percent
While policyholders are seeing their premiums rise for in-force policies, the price of new long-term care coverage has dropped by as much as 9 percent over the previous year, according to the 2016 Long Term Care Price Index.
“You had some high-cost providers exit the market and you had some that readjusted policy pricing,” Slome said.
Good long-term care coverage remains affordable, he said.
For $100 a month per person, a healthy couple age 60 can buy a good plan that pays for care at home or in a skilled nursing home. Nursing home care can cost as much as $80,000 a year in some states.
Advisors looking for LTCi coverage for clients should shop around because costs for virtually identical long-term care coverage varies from one carrier to another — by as much as 94 percent in some cases — as each carrier sets its own rates and applies its own discounts, Slome said.
InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].
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