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Short-term care product sales climb

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Continuing pressure on the long-term care insurance (LTCI) market is pushing buyers, and issuers, into the short-term care insurance (STCI) market.

The number of policies sold in the first half of the year increased 71 percent, to 26,237, according to the National Advisory Center for Short Term Care Information, a new affiliate of the American Association for Long-Term Care Insurance (AALTCI).

The total amount of premiums associated with new STCI policy sales increased 54 percent.

The STCI advisory center based the figures on results from a survey of nine STC product issuers.

The advisory center defines an STCI product as an insurance arrangement that pays for skilled nursing facility care, home health care or other types of non-acute care for a period of up to one year. Seven of the STCI survey participants sold products that cover skilled nursing home care, and eight sold products that cover home health care. Six offer benefits for assisted living community care.

The products are similar in many ways to traditional LTCI products, but they are simpler for insurers to write, because the products are not as sensitive to long-range care use forecasts, or to long-range interest rate forecasts.

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The world’s central bankers have been keeping the interest rates they control near zero since the Great Recession rolled in, in 2008. Low rates help borrowers who are able to qualify for loans but reduce the ability of insurers to offer products that depend heavily on income from holdings of high-grade bonds and other debt securities. 

See also: Short-Term Care Policies: Who’s Got ‘Em?

LTCI issuers and agents have been putting more emphasis on sales of shorter-tern products in recent years, and AALTCI recently began working with CSG Actuarial, an actuarial consulting firm, to collect STCI market data.


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