As retirees weigh the costs associated with long term care, the insurance that covers that care is becoming more expensive.
This shift comes as some industry mainstays have recently stopped writing new policies, with Genworth Financial among those providers reassessing their long term care insurance participation and pricing.
The market is due for a shift, writes columnist Mark Miller in a Reuters column this week, making it more difficult to obtain—and pay for—long term care.
With Genworth executives stating recently that the company is conducting a review of all aspects of its LTC insurance business, there are some onlookers who are predicting the company’s exit from the market, Miller writes, though Genworth refutes the claim.
“Indeed, it’s far more likely the company is trying to set the table for improving business conditions over the next few years, the result of three key factors,” he says, noting a rise in interest rates; more realistic lapse rate assumptions; and rising demand along with less competition.
Given the companies paring down their interest in the business, it could create an opportunity for those who remain in the business, which will allow them to charge more for the insurance plans.
“New policies already are 20 percent more expensive this year than in 2012,” Miller writes, citing data from the American Association for Long Term Care Insurance.”The average annual premium for a traditional LTCI policy covering a 55-year-old couple is $2,580 this year, the group says. And single women now pay 40 percent to 50 percent more than single men due to new gender-based pricing major carriers are rolling out.”
Rates may jump, leading holders of the insurance left to renegotiate or change plans.
“The carriers that are still in the market understand what the real experience has been, and they can price that into their policies,” Marc Cohen, chief research and development officer at LifePlans, told Reuters.
Written by Elizabeth Ecker