While some insurers aren’t selling the policies at all anymore, others are hiking their rates skywards.
Long term care insurance is becoming much more of a struggle to purchase, particularly for women, as many insurers have been withdrawing from this sector, and those that have stayed in the game have been driving their rates up to the point that some customers are now paying as much as 40 percent more.
This industry is, in some ways, facing the opposite effect that has been seen in the life coverage sector.
Life insurance policies for men are generally more expensive than those for women, because women will statistically live longer. But in the long term care insurance sector, this makes women the higher risk, as they are the ones who become the most likely to need the services, and to require them for a longer period of time. The fact is that the longer you live, the greater your chances for requiring LTC services and to need them for an ongoing period of time.
The long term care insurance industry has recognized that women represent the majority of their claims.
Women typically outlive their male counterparts by an average of five to seven years. As people get older, their risk of requiring LTC services grows. Therefore, statistically, it is the female policyholders who are most likely to receive payments from their long term care insurance policy.
This is supported by the fact that data is now indicating that approximately 70 percent of nursing home residents are women. Moreover 80 percent of assisted living facility residents are also women, as are two out of every three people receiving home care. The industry estimate is that $2 out of every $3 in claims from long term care insurance policies are for female policyholders.
When this sector of the industry first started in the 1980s, many companies jumped in to take advantage of what they felt would be a highly profitable area. However, the lack of history in the sector to provide accurate underwriting practices, skyrocketing care service prices, and an increasing lifespan has made this coverage much more costly than any of these companies had predicted.
The trend has now reversed itself, as insurers back out of long term care insurance and the premiums start to spike – particularly for women, who are most likely to need it.
