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Long-term care insurance market gets first new issuer in 10 years

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The National Guardian Life Insurance Co. is starting to market EssentialLTC, a new stand-alone long-term care insurance policy.

The Madison, Wisconsin-based life insurer is the first insurer to enter the U.S. market for stand-alone long-term care insurance products in more than 10 years. The policy will pay for facility-based long-term care services, such as nursing home care, and comprehensive home and community-based long-term care services.

National Guardian Life, a policyholder-owned mutual insurer, is best known as a seller of insurance policies that help the purchasers cover funeral costs and related costs.

The LifeCare Assurance Co. of Woodland Hills, California, is acting as the administrator for the program.

Patrick Juarez, vice president of group market sales at National Guardian Life, said in a statement about the product launch that the company will help increase the financial stability of the country’s growing senior population.

“As a mutual insurer, we are always focused on products that bring significant benefits to our policyholders,” Juarez said.

Long-term care insurance issuers have been struggling with more than decade of low interest earnings on invested assets, poor underwriting results and, in some cases, applications for premium increases of 50 percent or more.

Jim Glickman, an actuary who serves as president of LifeCare, has been active in making the case that the problems with old blocks of long-term care insurance policies are mainly because of the original issuers’ lack of understanding of how insureds would behave, and lack of understanding of how long interest rates could stay at very low levels. He has argued that new issuers that enter the market with access to solid long-term care insurance experience data should get much better results.

National Guardian Life says it will use a full medical underwriting process. The process will include a medical exam for applicants ages 66 and older and for some younger applicants.

The company will start by offering a policy with a two-year or three-year benefits period base. Purchasers of the three-year policy can pay to extend the benefit period. A lifetime benefits option is available.

Other options include 3 percent and 5 percent compound inflation protection.

Buyers can make all premium payments for lifetime coverage at once, through a single-pay option; make premium payments for the full period that the coverage is in effect; or pay for lifetime coverage by making annual payments for 10 consecutive years, through a 10-pay payment option.

National Guardian Life is starting by getting the product licensed in the states that participate in the Interstate Compact, a state regulatory group that simplifies the product filing process. The product is now available in Alaska, Alabama, Arkansas, Colorado, Iowa, Idaho, Illinois, Kansas, Louisiana, Maryland, Michigan, Minnesota, Missouri, Mississippi, North Carolina, Nebraska, New Mexico, Nevada, Oklahoma, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Utah, Washington state, West Virginia and Wyoming.

The company says it will offer insurance agents who sell the product a high first-year commission and product training.


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