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Effect of Gender-Based LTCI Prices Seen in New Index

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Insurers have been using gender-distinct prices for long-term care coverage for a few months now, and as you would expect, the cost for men is going down, while couples and women are paying more, according to the American Association for Long-Term Care Insurance.

AALTCI on Tuesday released an index of prices that consumers can expect to pay for “good,” “better” and “best” long-term care coverage.

A single 55-year-old man can get good coverage, which provides a certain amount of benefits that can be supplemented with other savings and income, for an average $925 per year. AALTCI found the range of prices for that level of coverage to be between $915 and $1,200.

Better coverage, which AALTCI described as coverage that a consumer can buy and add to later, would cost $1,045 per year, but the organization noted that this option was rare among providers.

The best coverage is a policy where benefits grow at 3% compounded annually and would run a 55-year-old man $1,765 per year, down nearly 15% from $2,065 in 2013.

It’s important to note that the 2013 average for best coverage was determined using unisex rates, so it’s the same rate a single 55-year-old woman would have paid last year. Genworth was the first to launch gender-distinct pricing on its long-term care products in April 2013, followed later by Transamerica, John Hancock and Mutual of Omaha.

After gender-distinct pricing rolled out, the average price for the best coverage for a single 55-year-old woman increased almost 12% to $2,307. Prices for coverage at the good and better levels are higher than the prices for men, too, at $1,225 and $1,350 respectively.

“Last year, leading insurers began charging women higher premiums,” Jesse Slome, director of the AALTCI, explained in a statement. “Women accounted for two-thirds of the $6.6 billion in long-term care insurance claim benefits paid out.”  

The spreads between highest and lowest price were larger for women, too. Good coverage for women cost between $990 and $1,720. Best coverage ran between $1,730 at the low end and more than double at $3,620 for the high end.

“One insurer will literally charge more than double for virtually the same level of benefits,” Slome said. “No one insurance company is always the least nor always the most expensive.”

Prices are up for couples, too. Good coverage for a 60-year-old couple cost $1,980, up 9% from 2013. Better coverage increased 55% to $2,220 and best coverage is up 3% to $3,840.

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