Every year for the past 19, Broker World magazine has published a survey on long-term care insurance. It’s a huge undertaking and provides valuable information for the industry and consumers alike about the traditional, standalone insurance marketplace.
A few highlights:
- Two carriers, Northwestern and Mutual of Omaha, remained the top two long-term care insurance carriers accounting for about 45% of new standalone policies sold in 2016.
- Individual standalone policies sold in 2016 were down 13.6% from 2015 sales. But hybrid policies, life insurance or annuities combined with long-term care options, more than made up for the decrease in standalone sales.
- The average age in 2016 for long-term care insurance applicants was 55.8, the lowest ever.
- The average annual premium for new policyholders in 2016 was $2480.
- Claims paid in 2016, totaled over $3.2 billion for individual standalone policies.
- Distribution of claims paid by care venue equated to 37.4% for nursing home, 31.2% for assisted living and 31.4% for home care.
What are people buying today?
There are five components that most long-term care insurance applicants look at when deciding about coverage.
Here we’ve outlined those components along with what most applicants purchased in 2016.
- Benefit Amount: The daily or monthly amount the insurance company pays for covered services. The average benefit amount is $4800 per month.
- Benefit Period: The period of time the insurance coverage will pay for covered services. The average benefit period is 4.7 years.
- Elimination Period: The period of time the policyholder is responsible for care expenses before insurance coverage begins. The average elimination period is between 84 to 100 days.
- Inflation Protection: A policy option that increases the benefit amount to keep pace with increases in care costs. The majority purchase 3% compound.
- Premium: The average cost of a traditional policy per person. The average premium is $2480 annually. This varies depending on carrier, age and gender.
Consumers are buying long-term care insurance. Today, about half of policies sold are of the hybrid design for two reasons:
- Rate stability.
- The “use it or lose it” objection to standalone products is largely eliminated.
You can read the full “2017 Milliman LTCI Survey” here.
The important takeaway …
Be sure that you have a plan for long-term care. Visit our blog on Observations and Family Conversations to understand the three questions that will help you design a plan.
Then be sure to discuss your plan with family and others who will be instrumental in helping you implement your plan. And, importantly, take steps to put your funding strategy in place.