State of the Long Term Care insurance industry

Time for my annual report on the Long Term Care insurance industry.

As you may know, the premiums we pay to the companies are generally invested in bonds and the bond market has been extremely depressed since 2008 really so it has been tough for any company to invest our premiums and get the projected return they want and thus paying out claims that people make.

Some of us saw price increases this year – after 10 years of owning an LTCi policy and paying premiums of $113/mo, Allianz (the LTCi company) jumped my premium to $203. I knew it would come eventually given the low bond prices. Although some of these premiums were underpriced way back when, the primary culprit is the low return these companies can get on bonds.

Keep in mind that companies do give you choices on how to keep your current premium low when this happens.

Full exams are the norm and women are now charged more than men as we tend to live longer and thus use the policies. People who are in their early 50’s will get the best pricing as they are younger and probably in good health. Health really matters with this product. And the question “Has anyone in your family been diagnosed with Alzheimer’s disease?” is now on applications.

On the back I have included a short article from our local paper that is mostly accurate in my view. What it doesn’t give is the cost of someone helping out in your home (about $22/hr here in Oregon) or Assisted Living ($35,000 yr base price for a one bedroom) so the $91,250 / yr for skilled care looks like a scare tactic to me.

Please know you can call me if you have questions or if your clients do. Remember, if someone has been diagnosed with a medical problem they will probably not qualify under these tough underwriting conditions. It’s best to call first.