Applicants for the coverage are experiencing a notable downtrend in their acceptance by insurers.
The industry has noted a striking trend in the long term care insurance sector, in which applicants for the coverage – particularly in the baby boomer age group – have not been able to purchase the policies because they have been rejected by their insurers.
These consumers are being told that LTC coverage is important to their future planning but cannot buy it.
According to the data that has just been released by LTC Tree, insurers offering long term care insurance are doing so within much stricter guidelines. This is an area where the potential costs can be high and ongoing, so they are making significant efforts to mitigate their risks by being choosier about whose applications they will accept.
Some consumers have find themselves unable to purchase long term care insurance at any price.
There are a number of health condition trends that were identified as causing the number of rejections for long term care insurance applications to grow. These include: diabetes, obesity, heart disease, and a greater use of anxiety medications.
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According to the CEO of the company, Darrick Wilkins, insurers selling long term care insurance “are really tightening the underwriting belt. People with conditions such as Diabetes that would have been approved in the past are getting declined now.” He also pointed out that this type of policy is an important part of many retirement planning strategies in order to help to curb the risk of unforeseen expenses linked to conditions such as Alzheimer’s or an accident.
The company’s approval statistics showed that the approval rate for long term care insurance from 1999 to 2011 was an average of 80.91 percent. However, that rate plummeted in 2012 and 2013 to an average of 65.45 percent.
As the baby boomer population ages, the potential importance for long term care insurance continues to increase. However, at the same time, this realization is coming with the decline in health of that generation, which increases the risk of high costs associated with covering them. Therefore, it is becoming far less appealing for insurers to want to sell policies to individuals within this age group, and this is leading the rejection rate to rise.