Actuaries show how LTCI really works

The SOA package includes spreadsheets showing how much different factors, such as age, sex, policy type, policyholder underwriting class, and various health conditions, were to affect the likelihood that insureds would need assisted living facility care, home health care or nursing home care.

The actuaries looked, for example, at the widely accepted idea that “LTCI costs are much lower for married people.”

Many people involved with LTCI assume that LTCI costs are lower, on average, for couples, because married people tend to have better access than single people to family care,

The actuaries found that, in their pool of experience data, the difference was much lower at younger ages than at older ages. Single policyholders were about twice as likely as married policyholders to file claims at age 65, but the gap disappeared around age 87. Once policyholders reached their late 80s, married policyholders were about as likely to file claims as single policyholders.

LTCI issuers have reported having a great deal of trouble with low interest rates in recent years, and also a great deal of trouble with accurately predicting how likely policyholders would be to keep or drop policies. They have also reported having some trouble with predicting how policyholders would use their policies, in part because widespread use of the policies is relatively new, and the holders of the many policies sold in the 1990s are just getting to be old enough to file claims in large numbers.