Trends to Watch For in the Long Term Care Insurance Industry

Long-term care services refer to the personal and healthcare facilities as well as support that is provided to people who need it for an extended period of time.

While the long-term care insurance (LTC) industry has been growing in demand over the years, at this time it has an unsteady future. The sales of new LTC policies have fallen by 75%, and various policy carriers who were selling long-term care insurance 10 years ago have also majorly declined.

New Premium Structure for Long Term Care Insurance

LTC insurance was built on the idea that the rates of life insurance remained constant for several years. However, since there is little return on investment, carriers ask for huge hikes in the rates every year.

Now, one of the main leaders in the industry has come up with a new model, which is based on that of car insurance plans and asks for small price hikes every year. If the model is successful, other carriers are expected to follow the same procedure.

Here are some LTC policy trends you should expect in the New Year, so weigh in your options and pick a plan that best suits your needs:

• Cheaper policies, lower coverage: Carriers are now selling low-cost policies which, for example, give you varying prices each day for a year. Instead of selling consumers the 5% mark-up they sell them policies with only 3%. This means more consumers and lower premiums, but also less coverage.
• Selling simpler products online: Simple policies which can be easily compared online cut the costs for consumers and insurers alike. These are increasingly being adopted by various carriers looking to target online insurance shoppers.
• No rebound for group stand-alone insurance: Group policies have lost favorability in recent years. Employers don’t pick up these policies like they do health insurance plans, and most of the times employees don’t want them either.
• Combination and hybrid policies: Some companies have already started rolling out hybrids of life and LTC insurance, which have become integral parts of their retirement product lines. Look for more of these products to come out in the next year.
• Health and long-term care combos: Though this product still seems to be a while away, there is a surprising number of rumours about it. Look out for combinations that offer more than what you bargained for, and you might end up saving money smartly.
• Public/private partnership: The idea behind this particular partnership is that customers could cover the first few years of long-term care risk with savings, home equity, and short-term private insurance. The people who would need care for five years or more, would be backed by government insurance.
• Younger consumers are buying LTC: 15 years ago, LTC buyers were mostly people in their 70s, but today they are in their mid-50s. This stems from the fact that today people realise the benefit of long term care at an earlier age. More people who have seen family members struggle with health issues, understand the benefit of acquiring LTC early on and hence get a head start.
• Asset-based plans are becoming common: Compared to regular LTC policies, asset-based plans tend to offer greater premiums without big increases, as well as more flexibility in the payment schedules. The best thing about them is the guarantee that if LTC benefits aren’t used, the beneficiary of the insured will receive them in the form of an annuity.

Keep an eye open for these possibilities in the New Year and make wise choices for a more stable future.