Study Finds Low Rates Of Lapse And Mortality For LTCi Policyholders

WINDSOR, Conn., July 27, 2015—LIMRA, in collaboration with the Society of Actuaries (SOA), published a report examining recent experience data for long-term care insurance mortality and persistency experience in the United States.

“With 70 percent of Americans over 65 expected to need long-term care, this research is very important to help companies design their products to reflect consumer needs and actual behaviors around long-term care solutions,” said Marianne Purushotham, corporate vice president and research project director for LIMRA.  “Our findings provide a better view of why a policy is terminated by separately studying the key factors driving lapse and mortality experience—such as age, gender, marital status, when the policy was issued and how often the premium must be paid.”

Based on the 10-year experience period, mortality rates for long-term care policyholders appear to be lower than other insurance products including life insurance and individual annuities.  “In addition, we continue to see very low ultimate lapse rates for long-term care policies in comparison to other similar insurance products,” said Purushotham.

The study used data gathered by the SOA from 22 long-term care carriers in the industry, representing approximately 75 percent of the lives in-force during the period 2000-2011. The report also used industry experience databases for incidence, claim termination and claim utilization experience by Towers Watson. Aggregate databases for policy termination experience including voluntary lapse, mortality, and total termination experience were developed by LIMRA and are detailed in the report.