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Life Health > Long-Term Care Planning

Be precise

By Steve Zabel

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In years to come, there will continue to be a massive need for long-term care (LTC), and for many, long-term care insurance (LTCI) may be the best solution.

According to AARP, over the next 18 years 8,000 baby boomers will turn 65 each day. The National Clearinghouse for Long-Term Care Information says that almost 70 percent of people over 65 will need some form of long-term care.

Genworth’s 2012 Cost of Care Survey shows the median annual cost for a private room in a nursing home is well over $80,000.

While some people can pay those costs themselves or will be cared for by family, for others long-term care insurance is a better option.

We believe this market dynamic creates an opportunity.

We see some major challenges as well. Insurers need to stay financially strong to honor their promises to policyholders, even as the cost of care keeps rising and carriers face pressure from the low interest rate environment. It’s also important to create innovative new products, make it easier for distributors to sell products, and enhance service to both distributors and policyholders.

One of these innovations is something we refer to internally as “precision pricing.”

At a high level, we’ll be evaluating each applicant for long-term care insurance with much greater detail during the underwriting process.

This more granular approach will take into account health, age, gender (for individual applicants), and the product features most important to each customer. We’ll have more underwriting categories, which will help us balance risk and reward on a case-by-case basis.

This is a new idea within the long-term care industry—an idea whose time has come. It will help us meet the long-term care financing needs of consumers for years to come, while honoring the commitments we’ve made to our policyholders.

Whether it’s snack food companies cutting back on salt and fat, automakers building smaller and more efficient cars, or technology companies “going mobile,” long-term success depends upon innovation and adaptability.

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