Trends in long term care insurance purchasing are shifting
According to the main industry association, people are choosing lower inflation growth options.
The American Association for Long Term Care Insurance (AALTCI) has now reported on the outcomes of its 2014 study that has determined that buyers are significantly changing their buying patterns when it comes to this type of coverage.
Previous years had seen customers purchasing choices that gave a 5 percent annual boost to initial benefits.
However, according to Jesse Slome, the director of the association, “In years past consumers favored policies that included an option that increased their initial benefits by five percent yearly but that’s a formula that is no longer affordable and likely not even necessary.” The association conducts regular data analyses of the buying patterns surrounding long term care insurance policies. The organization published its latest findings within the “2015 Long Term Care Sourcebook”.
Long term care insurance companies are stating that a lower growth factor is now being purchased.
Slome pointed out that insurance companies are seeing that almost half of all new LTC insurance policy purchasers have been choosing a notably lower growth factor of an annual three percent. He explained that using that formula makes it much more affordable for them to be able to buy the insurance policies. He also stated that those individuals decrease their likelihood of facing a rate increase in the future and “quite honestly may indeed be more than enough insurance protection.”
The AALTCI director said that a decade ago, the policies that were issued which included the five percent growth option were the ones that would occasionally undergo insurance rate increase. Inflation has stayed quite low for a number of years and it has nearly not even occurred in the field of home care services, which is typically the type of service that is sought through the coverage of an LTC insurance policy.
When it comes to purchasing a policy, Slome said that the strategy that is recommended by the association is that “We advocate a ‘Good, Better, Best’ approach to buying long term care insurance and the ‘Best’ coverage today is one that includes the 3 percent growth.”