Is Long Term Care Insurance Unsustainable?

[tlmarketing]

Interesting comments in this article from the NAIC commissioner

Long-term-care insurance offers protection, but it’s not right for everyone - The Washington Post

Makes you wonder what will happen to long term care insurance premiums if companies are no longer writing policies???

 

[Justin Bilyj]

Well if LTCi goes, the planning for such an occurrence won't. Medicaid trusts will grow as a result.
This need will only grow with the amount of baby boomers on the horizon coupled with unhealthy habits i.e. smoking, sendentary lifestyles, and eating gmo's.

Maybe life insurance ltci riders will dissolve, I don't know, I wonder what the effect would be on that part of LI...

 

[Mr_Ed]

Interesting comments in this article from the NAIC commissioner

Long-term-care insurance offers protection, but it’s not right for everyone - The Washington Post

Makes you wonder what will happen to long term care insurance premiums if companies are no longer writing policies???

there's nothing to wonder about.
it's already happened.

 

[tlmarketing]

Well if LTCi goes, the planning for such an occurrence won't. Medicaid trusts will grow as a result.
This need will only grow with the amount of baby boomers on the horizon coupled with unhealthy habits i.e. smoking, sendentary lifestyles, and eating gmo's.

Maybe life insurance ltci riders will dissolve, I don't know, I wonder what the effect would be on that part of LI...

Life products with LTC riders or MoneyGuard type products may generate more interest from consumers than straight LTC policies going forward....

the premium increases announced recently with companies are only the beginning....only a small portion of the population believes in long term care insurance and it seems to me that the pool of insureds is not enough to maintain stable rates.

 

[Mr_Ed]

Life products with LTC riders or MoneyGuard type products may generate more interest from consumers than straight LTC policies going forward....

the premium increases announced recently with companies are only the beginning....only a small portion of the population believes in long term care insurance and it seems to me that the pool of insureds is not enough to maintain stable rates.

those Life/LTC combination products are not as popular with consumers as you may think - and for good reason.

the best thing traditional ltci has going for it is their claims departments. a lot of people who are buying ltci now are people whose parents are on claim with their ltci policies they bought 15 or 20 years ago.

 

[sellinmachine]

Is long term care insurance sustainable? Indications are that it is not, is'nt it?

What I seldom see any more is what I grew up watching happen with folks late in life. While the old folks were very independent and did'nt quickly or willingly allow it to happen adult children took them into their home for the last months, sometimes a few years. (Uh-oh, I'm screwed, my children predeceased me, thanks to some in politics)

 

[bkdinsurance]

The main problem is that the older policies weren’t priced right to begin with. Companies expected about 8 percent of customers to stop paying their premiums, when, in fact the lapse rate is closer to 2 percent

 

[JMO Fan]

Late-duration lapse rates have dropped below 1% for many insurers. Combined with record-low investment returns, low lapses are hard on LTC carriers. Lapsing policies should not be a good thing for carriers; so maybe they shouldn't have assumed any lapses in setting rates, which shifts the risk of lapsing to consumers.

 

[Arthur Rudnick]

Late-duration lapse rates have dropped below 1% for many insurers. Combined with record-low investment returns, low lapses are hard on LTC carriers. Lapsing policies should not be a good thing for carriers; so maybe they shouldn't have assumed any lapses in setting rates, which shifts the risk of lapsing to consumers.

Lapse rates are looked at by actuaries to set rates for every insurance product. There is no product out there that has 100% persistency.

In the mid-70's, LTCi was a new product and there were no existing statistics for the actuaries to look at. The closest product at the time to LTCi was Medicare Supplementals and the lapse rates for that was about 8%.

So, 8% was what went into the pricing. The actual lapse rates for LTCi is about 3%. It took many years for the carriers to see the results and that 5% difference is one of the reasons that rates have increased so dramatcially over the past 10 years.

 

[Mr_Ed]

The main problem is that the older policies weren’t priced right to begin with. Companies expected about 8 percent of customers to stop paying their premiums, when, in fact the lapse rate is closer to 2 percent

So?????????????????????????????????

Why is this a problem?
What difference does it make if the product was not priced correctly 15 years ago?
All that matters is if it's priced correctly NOW!!!!