My Comments: This has always proved to be a difficult conversation with clients. When they are relatively young, the topic is far away unless they have a parent with issues. And then the money has to be reserved for their care.
And when you reach my age, there is still a strong denial that you will become so debilitated that you cannot live at home and carry on. Modern medicine is working to keep us alive longer and longer, but we are often feeble and unable to properly care for ourselves. So we need help, and that often costs a ton of money, money that we may or may not have. Enter an insurance policy.
And there are kinds of coverage that effectively leverage what you already have and if you never need it, the money flows to your kids. But the cost is increasing as more and more of us reach a critical age, and there are fewer and few people ready and willing to look after us.
WINSTON-SALEM, N.C.–(BUSINESS WIRE)–If long term care insurance (LTC) is not on your holiday shopping list, you may want to add it before the end of 2013 — particularly if you are a woman. Rates for females are forecast to increase from 35 percent to 40 percent by second quarter of 2014, so adding LTC now to your plan for income and asset protection makes good financial sense, say industry experts.
“now would be that time. It’s going to cost a married couple significantly more money for the same contract and same benefits once those rates change to become gender specific.”
“Long term care continues to be a major risk for people, and yet many have put off purchasing LTC insurance to cover such things as nursing home care because of instability among carriers,” said Danny Mensh, president of Mensh Insurance, located in Winston-Salem, N.C. “Now, in order to stabilize the market, major carriers are increasing rates, and Genworth Life Insurance Co., one of the largest underwriters, has filed for a new pricing structure that includes substantial rate increases for women.
“If there ever was a time to go ahead and do something,” Mensh continued, “now would be that time. It’s going to cost a married couple significantly more money for the same contract and same benefits once those rates change to become gender specific.”
Why the female rate increases? Simply put, women live longer and will use more LTC insurance as their health deteriorates. “We know that when looking at males and females who reach age 65 and are healthy, statistics show females are living into the mid to late 80s vs. males, who are living a few years less,” Mensh said. According to the Social Security Administration, a man reaching age 65 today can expect to live, on average, until age 83, while a woman turning 65 today can expect to live to age 85.
“Genworth is the oldest writer of LTC insurance with the largest block of in-force business,” said David Hillelsohn, president of Haslett Management Group in Herndon, Va., an independent wholesaler of LTC insurance. “As a result, they have more claims experience than any other company in the market, and a more robust actuarial department committed to the LTC product line. As of June 30, 2012, Genworth had paid more than $8.3 billion in LTC insurance claims since 1974. This allows them to predict with greater certainty how LTC usage will trend in the future and adjust their pricing models to reflect the current market environment.” As a result, the company has asked state insurance departments to approve different LTC premium rates for men and women, reflecting the higher likelihood of women using the benefit. The expectation is that other carriers will soon follow.
When looking at LTC insurance, it’s wise to choose a company that is looking to stabilize pricing and stay in it for the future. “Many companies have chosen to stop selling new LTC insurance policies or have sold their LTC business because they had vastly under priced it to gain a competitive edge,” Mensh said. “The carriers committed to the market are increasing rates, becoming more stringent with in-home interviews and telephone interviews, and possibly requiring physical exams in the future. These are all pretty reasonable measures to take if you want your premiums to stay fairly consistent.”