Changes in the LTC insurance industry make the long-term care policies costlier and more difficult to obtain – especially for women. Learn more.
Investors – particularly women - face higher hurdles to LTC insurance amid industry restructuring and a looming crisis in long-term care, according to experts.
“Long-term care remains one of the great social issues facing Americans as they head into their retirement years,” according to a statement released last month by Genworth Financial, a leader in the LTC insurance industry. Other providers – including Prudential, Metlife and Allianz – have stopped selling the policies after inaccurate actuarial predictions and low-interest rates reduced the profitability of the plans.
Learn more about insurance companies’ exodus from the LTC market by clicking here.
Few of the 77 million baby boomers entering retirement are prepared to pay for the LTC care through personal savings or insurance coverage, according to Diane Calmus, a researcher for The Heritage Foundation, a think tank based in Washington, DC. A range of psychological and economic factors deter Americans from obtaining LTC insurance, which provides for health care and assistance with daily living activities for the disabled and frail elderly. Policy ownership rates are higher among affluent investors, according to research from Spectrem’s Millionaire Corner, but less than one-third of high net worth investors – those with $5 million to $25 million – have taken out an LTC policy.
The cost of a long-term care policy is based on a range of factors, including an investor’s age at the time he or she buys the policy, the maximum payout of the policy and the length of the coverage period, according to LongTermCare.gov, a website provided by the U.S. Department of Health and Human Services. Investors with certain health conditions – such as Parkinson’s or Alzheimer’s - may not meet the insurer’s medical underwriting standards.
What factors go into the decision to buy long-term care insurance? Click here to learn more.
Genworth – the nation’s biggest provider of LTC insurance - is revamping is Privileged Choice Flex plan by adding paramedical exams to the underwriting process and instituting gender-based pricing structures for individual applicants. Genworth is also offering lower rates for qualified couples and inflation-protections options.
The exam – which includes lab work and blood pressure tests – will make it more difficult for investors with certain health conditions to qualify for LTC insurance, according to Michael Chamberlain, a certified financial planner blogging for the National Association of Personal Financial Advisors. The new gender-sensitive rate structure could rates LTC premiums by as much as 40 percent for single women, who tend to outlive men by five to seven years.