Prices are increasing for new policies in both individual and group plans.
Experts in the coverage industry are now saying that the price of a long term care insurance policy is currently on the way up.
The risk is that it may cause them to become cost prohibitive for the middle class
The price increases for new policies of long term care insurance aren’t climbing only in individual coverage, but many group policies are also on the rise. In fact, when compared to five years ago, there has been an average increase of 30 to 50 percent in the rates quoted to individuals between the ages of 55 and 65.
This data is from the trade group called the American Association for Long Term Care Insurance.
Premiums have been increasing because insurers have been facing claims that require payouts that are larger than had been anticipated. The policyholders are living longer nowadays than the actuaries had predicted, and improved medical care is allowing the chronically ill to live longer lives. Moreover, there are a larger number of people who are continuing their policies instead of dropping them over time.
Another cause of these rising long term care insurance prices is that in some states, there have been very low interest rates that have significantly reduced the returns that the insurers are able to bring in from their investments. That said, there are other states where this does not impact premiums. For example, the Indiana Department of Insurance bans insurers from being able to boost their premiums based on lower returns from their investments.
No matter the cause of the prices of this coverage, it has made a notable dent in the number of individual buyers of its policies. In the United States, there was a decrease of 43 percent between the number of long term care insurance policies in 2004 and those in 2009. Since then, according to industry funded research firm, Limra International, there has been only the slightest recovery from the nosedive.
This has caused some larger insurers, such as MetLife and Prudential Financial, to step out of the individual market for long term care insurance, as they have deemed the policies to be no longer financially feasible.