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Life Health > Long-Term Care Planning

AALTCI: LTCI buyers are getting less inflation protection

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The characteristics of typical long-term care insurance (LTCI) buyers may be changing rapidly.

The American Association for Long-Term Care Insurance (AALTCI) has looked at LTCI buyer demographics in a preliminary analysis of data on 85,000 people who bought LTCI coverage in 2014 and compared the results with those from a similar analysis the group conducted using 2012 data.

See also: AALTCI: Average age of life-LTC insureds drops

Insurers have talked about a need to cope with low interest rates and new information about LTCI claims by focusing on selling cheaper, leaner products to younger consumers.

AALTCI found that 40 percent of the buyers in the 2014 data pool were age 54 or younger, up from 29 percent in 2012.

See also: Who’s buying LTCI?

The percentage who bought policies with protection against 5 percent in annual long-term care (LTC) cost increases fell to 14.5 percent, from 51 percent in 2012.

In 2014, about half of the buyers bought policies with protection against an LTC inflation rate of 3 percent.

See also: AALTCI posts LTCI claim data

AALTCI is publishing the underlying data used in the analysis and other LTCI market data in the 2015 Long-Term Care Sourcebook.

Insurers have noted that, in recent years, LTC costs have been rising faster than the general inflation rate but less than 5 percent per year.

Jesse Slome, AALTCI executive director, said in a statement that he believes buying coverage with a lower level of inflation-protection can be a good way to hold the cost of coverage. ”If you can afford more coverage, that’s certainly a viable choice,” Slome said. “But many people today plan to have their insurance pay part of their costs, with the rest paid from their Social Security benefits or their retirement savings.”


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