A new twist is coming to long-term care insurance: gender-based pricing, and women can expect to pay 20% to 40% more for coverage than men.
So says Michael Kitces, an AdvisorOne contributor, in his Wednesday Nerd’s Eye View blog post. Kitces notes that the LTC industry is moving toward gender-based pricing in order to help “restore stability and regain profitability.”
Genworth, the market leader in LTC coverage, will be the first to venture down the gender-based pricing path, and is “anticipated to begin receiving approvals to issue new policies with gender-distinct costs as soon as April,” Kitces writes.
“Once the changes take effect, it’s likely that most other major LTC insurance companies will follow suit as well,” Kitces says, “and the new cost structure may be an industry standard by the end of the year.”
A Genworth spokesperson told AdvisorOne on Wednesday that Genworth will launch in April its newest long-term care insurance product, Privileged Choice Flex 2. Genworth, the spokesperson said, “will be among the first major carriers to implement gender-distinct pricing with this product.”
Women applying for coverage individually will receive higher rates than men applying individually, the spokesperson said, and for both individual rates, the applicant will receive higher rates than couples. ”Approximately 80% of all Genworth LTCI applicants are couples; approximately 10% of Genworth applicants are individual women,” the spokesperson said. The change will not impact current policyholders, the spokesperson said. “Two states require unisex rates: Montana and Colorado.”
“The change is being made now to reflect our actual claims experience and help stabilize pricing,” the spokesperson added. ”The percentage increase will vary by issue age and the benefits selected by the applicant. The changes will go into effect as states approve the product beginning in the first half of 2013.”