Long Term Care Policies Will Soon Cost More For Women
The gender gap is about to get a little wider as the formerly egalitarian Long Term Care insurance market starts charging higher prices for women.
While life insurance has long been priced by sex, companies that provide Long Term care insurance (LTCI), mainly used to cover healthcare expenses in old age or for severe illness, have long avoided it. But for the first time this year, they will introduce gender-based pricing, starting with policies from Genworth Financial, Inc. the nations largest seller.
The aim is to reflect actuarial realities – women live longer and prepare ahead more for their futures by buying policies. Genworth says two-thirds of it’s 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-specified 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).
Industry experts expect gender-based pricing will be adopted by other carriers before the end of this year – both for individuals and married couples.
Gender-based pricing is the latest stopgap measure for an industry that already is struggling. The ultra-low interest rate environment has made it difficult for the insurance companies to earn enough on their fixed income portfolios to fund benefits.
Another challenge for insurance companies, ironically, is customer loyalty. Only about 3 percent of policyholders allow their coverage to lapse. It’s a smart consumer move to hold onto policies, but it is costly for carriers, who ultimately wind up paying more claims.
Also, the stressed Medicaid system is the nation’s largest insurer, which puts stress on federal and state budgets. Outside of that, family members are the most common source of care.
So, what can women do to get the lowest rates possible in this new environment?
1. Get Started Now – If you have been thinking of buying Long Term care insurance, this would be a great time to get going. Genworth is applying now for gender-based rate increases to individual state insurance regulators.
2. Apply As A Couple – If you are married, applying as a couple will keep your cost down. Genworth and the rest of the industry apply discounts for couples who apply for coverage together.
3. Ask Questions – To find out more information about this article and to get informed on Long Term Care basics, give me a call.
Abe Glickman, LTCA, LTCP
Member: AALTCI, NAHU, NAIFA, SOA
Abe Glickman Insurance Group
Toll-Free Phone: 877-298-5824
“It is better to create a plan 10 years too soon than one day too late.”
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