Long Term Care Insurance Will Soon Cost Women More




The cartoon is a link to "The Growing Need for Long-Term
 Care Insurance- Part 1" authored by Desiree Baughman,
 writer for InsuranceQuotes.org (link removed upon request)

The long-term care insurance (LTCI) market will soon change dramatically as companies start charging higher premiums for women.  Life insurance has long employed gender-based pricing, by gemder, but LTCI insurance companies have avoided the practice. For the first time this year, starting with policies from Genworth Financial Inc, the nation's largest seller, the industry will move to gender-based pricing.

The industry's goal is to reflect actuarial realities.  Women live longer and plan more for their futures by buying LTCI policies. Genworth says two-thirds of its LTCI claim payouts go to female customers, and overall, women account for 57 percent of all policy sales in 2011, according to data from LIMRA, the insurance research and consulting group.

Genworth will introduce gender-specific policy pricing by this spring, if the plan passes regulatory hurdles. That will boost the cost of new policies for women by 20 to 40 percent, depending on the applicant's age and benefit package, according to the American Association for Long-Term Care Insurance (AALTCI).

According to Reuters, Genworth spokesman stresses that the pricing will be applied only for women applying on their own - 10 percent of its policy applicants. The company will continue to offer lower rates to married couples who purchase joint coverage, and the changes won't affect current policyholders.  Gender-based pricing will likely be adopted by other carriers - both for individuals and married couples.

Gender-based pricing is seen as a necessary step for companies struggling in the current low interest rate economy to earn enough on their fixed income portfolios to fund benefits. 

Premiums have generally beeen on the rise regardless,  For new customers, policies in 2012 cost anywhere from 6 to 17 percent more than in 2011, according to AALTCI, and they are 30 to 50 percent higher than five years ago. Competition also reduced as a long list of major insurance companies have stopped writing new individual policies, including Prudential Financial Inc, Metlife Inc., and Allianz Finance Corp.

Gender pricing is just the latest sign that our approach to long-term care isn't working. The private market is limping along as a small niche business - overall penetration remains less than 5 percent of the total possible market, according to LIMRA.

If you have been thinking about LTCI,  buy it now.  Better, consider a life insurance policy or annuity that will provide a leveraged death benefit during your life specifically for long term care.  These "linked-benefit" policies are an attractive alternative to traditional long term care insurance.