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LTCI cost picture looks complicated

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Insurers’ efforts to maximize sales while minimizing claims costs may have led to unexpected shifts in stand-alone long-term care insurance (LTCI) rates this year.

The American Association for Long-Term Care Insurance (AALTCI) has given the public a glimpse of the 2015 LTCI cost change picture in its latest LTCI premium analysis.

AALTCI says it believes the average cost of new LTCI coverage is 8.6 percent higher now than it was a year ago.

See also: AALTCI finds modest increase in LTCI prices

But the rate of increase varies widely according to whether the buyer is a man, woman or couple, and whether the buyer is seeking standard, richer or leaner benefits.

Many of the insurers that have stuck with the LTCI market now charge women more than they charge men, to reflect the reality that women are much more likely to use paid long-term care (LTC) services — but insurers now seem to be increasing prices for men faster than they’re increasing prices for women.

For a single 55-year-old woman, for example, the average annual cost of new, standard coverage is now $1,350 or the same as it was a year ago. That woman would pay 4.5 percent more for a policy with richer benefits, or $2,411 per year, and 13.5 percent more for a policy with leaner benefits, or $1,390 per year.

For a single 55-year-old man, the average annual cost of standard coverage is only $1,198 per year, but that average price is 14.6 percent higher than the average AALTCI recorded a year ago.

For the single man, the average price of leaner coverage increased 14.6 percent, to $1,060 per year, and the average price of richer coverage jumped 17.6 percent, to $2,075.

See also: AALTCI: LTC Coverage Costs Vary by More Than 40%

Jesse Slome, the executive director of AALTCI, notes in a statement about the results that LTCI issuers are facing low investment returns on their bond portfolios and higher claim costs.

The issuers paid about $7.5 billion LTCI benefits in 2014, AALTCI reports.