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Long-Term Care Planning Firm Sees Life-LTC Hybrid Prices Rising

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A long-term care (LTC) planning firm says it’s seeing signs that low interest rates are starting to affect prices for new life insurance policies that offer LTC benefits.

Murray A. Gordon & Associates Long Term Care Planning (MAGA) of Bannockburn, Illinois, says one life-LTC hybrid issuer has warned it that prices on new life-LTC hybrids will go up about 8% to 10% in January.

“We expect more carriers to follow suit,” MAGA said Monday, in an email blast sent to agents.

Analysts at Milliman, an actuarial consulting firm, reported in September that they saw signs that life-LTC prices were rising.

(Related: Low Interest Rates Push Prices for New Life-LTC Hybrids Higher: Milliman)

Nine life-LTC hybrid issuers told the Milliman analysts that they had increased prices for new hybrid policies in the previous 12 moths, and two of those issuers said they had repriced new products three or more times in the previous 12 months.

The life-LTC hybrid issuers said the price increases were the result of the effects of low interest rates, not the result of the effects of the COVID-19 pandemic on death benefits.

A life-LTC hybrid is a life insurance policy that comes with a rider that uses the policy value to provide LTC benefits if an insured needs long-term care.

Life-LTC hybrids generated about $4.3 billion in premium revenue in 2018, according to LIMRA.

MAGA said one advantage of buying a life-LTC hybrid, rather than a stand-alone long-term care insurance policy, is that a hybrid is set up in such a way that, once a policy is issued, the premium is locked in and will never increase.

— Read How the Recent Upheaval Might Affect Long-Term Care Plannerson ThinkAdvisor.

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