Long-term care (LTC) planners will start 2015 knowing that interest rates are still low, rating agencies and shareholders are still tough, the (rapidly aging) Baby Boomers are still in denial, and everything that can go wrong will, of course, go spectacularly wrong.
But major organizations continue to care enough about meeting the long-term care needs of the people of the world that they scrape up the time and cash to publish major reports on the topic.
The American Council of Life Insurers (ACLI) weighed in.
Swiss Reinsurance Company participated with a sobering report about the global LTC planning problem.
Progress seems slow, and uncertain, but just the fact that so many big, high-profile organizations care deeply about the topic may mean something. Insurance industry luminaries have parents, too, and they see the need for planning first-hand.
Kulli Tamm, a senior economist at Swiss Re, took some time to participate in an e-mail interview about the LTC planning challenges.
For rays of hope drawn from her answers, read on.
1. Insurers are getting better at designing and building stable LTC financing vehicles.
Designing stand-alone long-term care insurance (LTCI) has been very difficult, Tamm says.
“How can you really predict 40 to 60 years ahead?” Tamm asks. “Many decades can pass between the design and pricing of the contract and the eventual payment of benefit.”
Advisors used to stand-alone LTCI have raised questions about the nuts and bolts of the provisions inside some products based on life and annuity foundations, but the new products should be less sensitive to changes in assumptions, Tamm says.