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LTC Hybrid Experience Looks Great: Milliman Actuaries

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Many U.S. life insurers have been moving toward more sales of long-term care (LTC) benefits added to life insurance policies  or annuity contracts, and away from sales of stand-alone long-term care insurance (LTCI) policies.

One question has been: Do the LTC hybrid products really produce better results for the issuers than stand-alone LTCI policies, or do the hybrid products simply free protection against long-term care risk from being associated with a product type that’s out of favor?

Actuaries from Milliman Inc. have looked at a few years of early experience data from 11 hybrid issuers and found that the early results look good.

(Related: Life-LTC Hybrid Sales Soar: LIMRA)

The likelihood that hybrid purchasers will actually claim LTC benefits early on is lower than what the issuers included in their pricing assumptions, Milliman said Thursday, in an announcement of the release of the new analysis.

The actual-to-expected ratio is much lower than the claim assumptions that would be used to calculate prices for stand-alone LTCI, according to Milliman.

The odds that purchasers would file claims were higher for products that provide extra benefits for people who have serious health problems than for products that simply provide a portion of the death benefits early, but the “extension of benefit” hybrids still performed well, according to Milliman.

Milliman is not making detailed hybrid analysis data available to the public.

Milliman appears to expecting to see intense insurer interest in the topic:Milliman is making the detailed results available only to would-be readers who are willing to negotiate with Milliman to find out what the price is.

To find out what the price is, purchasers must fill out a form that states that, “Upon receipt of your request, the authors will reach out to discuss terms of purchase for the report.”

A link to the form that avid LTC hybrid watchers can use to dicker for access to the Milliman analysis is available here.

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