Rates for females are forecast to increase from 35 percent to 40 percent by second quarter of 2013, so adding LTC now to your plan for income and asset protection makes good financial sense, say industry experts.
"Long term care continues to be a major risk for people, and yet many have put off purchasing LTC insurance to cover such things as nursing home care because of instability among carriers," said Danny Mensh, president of Mensh Insurance, located in Winston-Salem, N.C. "Now, in order to stabilize the market, major carriers are increasing rates, and Genworth Life Insurance Co., one of the largest underwriters, has filed for a new pricing structure that includes substantial rate increases for women.
"If there ever was a time to go ahead and do something," Mensh continued, "now would be that time. It's going to cost a married couple significantly more money for the same contract and same benefits once those rates change to become gender specific."
In a release, the company attributed rate increases to the fact women live longer and will use more LTC insurance as their health deteriorates. "We know that when looking at males and females who reach age 65 and are healthy, statistics show females are living into the mid to late 80s vs. males, who are living a few years less," Mensh said. According to the Social Security Administration, a man reaching age 65 today can expect to live, on average, until age 83, while a woman turning 65 today can expect to live to age 85.
"Genworth is the oldest writer of LTC insurance with the largest block of in-force business," said David Hillelsohn, president of Haslett Management Group in Herndon, Va., an independent wholesaler of LTC insurance. "As a result, they have more claims experience than any other company in the market, and a more robust actuarial department committed to the LTC product line. As of June 30, Genworth had paid more than $8.3 billion in LTC insurance claims since 1974. This allows them to predict with greater certainty how LTC usage will trend in the future and adjust their pricing models to reflect the current market environment." As a result, the company has asked state insurance departments to approve different LTC premium rates for men and women, reflecting the higher likelihood of women using the benefit. The expectation is that other carriers will soon follow.
When looking at LTC insurance, it's wise to choose a company that is looking to stabilize pricing and stay in it for the future. "Many companies have chosen to stop selling new LTC insurance policies or have sold their LTC business because they had vastly under priced it to gain a competitive edge," Mensh said. "The carriers committed to the market are increasing rates, becoming more stringent with in- home interviews and telephone interviews, and possibly requiring physical exams in the future. These are all pretty reasonable measures to take if you want your premiums to stay fairly consistent."
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