How will carriers, advisors and consumers react to all of the new realities in long-term care insurance (LTCi)?
Now that the transitions of 2013 are behind us and 2014 is here, one point is clear: Each group needs the best possible information about the new market landscape.
Consumers need to take note
Despite the soft sales in 2013, there is compelling consumer demand for long term care (LTC). An aging boomer marketplace is dealing with issues affecting aging parents, and the demise of the CLASS plan means no government solution will come to their rescue.
Current policyholders need to pay close attention to the benefits and requirements of their particular policy. According to the American Association for Long Term Care Insurance (AALTCI), almost 8.1 million Americans have LTC insurance. But what do they have? It’s critical for policyholders to look at their current policy to see how it performs.
For example, some older plans may cover alternate living facilities but not all types of assisted living care. Some plans that cover home care may require that the home health care agency be Medicare licensed, despite the trend that private pay home health care providers may not take government dollars.
What about people who have nursing home-only plans? They may need to consider enhancing their LTC protection plan or set aside money to pay home-care claims. For many, it may be time for an in-force policy review from an advisor.
And then there are the rate increases. Rate increases are affecting current policyholders and making big news. Many believe that getting a rate increase will lead to policyholders dropping coverage. Is that true? What actually happens when a policyholder gets a large rate increase? To the surprise of many, according to a U.S. Government Accountability Office study of federal employees who received increases on their private LTC plans, almost half (46 percent) didn’t change plan benefits and paid the additional premium. Other policyholders decided to reduce inflation coverage or benefits. Only 1.6 percent lapsed coverage. After older policyholders look at new LTC premiums, most conclude they made a wise choice buying LTC when they did, even with the rate increases.
New policy buyers face myriad things to consider. First, most start by researching online to decide if LTCi is for them. If they find it to be a wise decision, the next consideration is where to buy it. Should they ask their current advisor (if they have one), go to an online seller, ask their employer, look to an association or affinity group, or work directly with a carrier? The answer to that question will come down to trust — whom can they trust with the recommendation of a solution.
Carriers need to do their research