Look Through the [LTCI] Windshield, NOT Through the Rear-View Mirror

Long Term Care Insureance - Look Through the [LTCI] Windshield

There is no shortage of negative press surrounding traditional LTC Insurance these days.  Recent rate volatility has led to understandable concern with both agents and advisors, and consumers.

However, we encourage those same agents and advisors (and consumers) to do a little extra homework on the topic of LTC Insurance, to help separate fact from fiction.

Consider these headlines:

  • “Long-term care insurance costs are way up. How advisors can help clients cope”
  • “Your Long-Term Care Insurance Rate Spiked. Now What?”
  • “The ever-rising cost of long-term care insurance”

While we can all agree the increases on both new LTCI policies, and in-force policies, has been unfortunate, there are valid broader economic reasons for those increases.  That said, we can’t blame consumers – or agents and advisors – for growing weary over the increases.  No consumer wants to be impacted by it, and no agents and advisors want to have that conversation with a client.

One inherent problem with the headlines – and even some of the content in those articles – is that they paint a picture that new LTCI policies being issued today are as likely to incur similar rate increases in the future as policies written in the past.

That is simply NOT TRUE.

Many of the economic factors that have lead to the premium volatility in LTCI in recent years are now “baked into the cake” of currently issued LTCI pricing.  Thus, while premiums are still not – and won’t likely ever be – guaranteed, it is reasonable to assume that premiums on policies being issued today will be much more stable – again, if not guaranteed – than policies issued in the past.

In fact, the Society of Actuaries recently did a pricing study on LTCI that reflected that very fact.[1]

So, the next time you are tempted to think that what has happened (with LTCI pricing) will continue to happen, we encourage readers to look through “the [LTCI] windshield and NOT the rear-view mirror!”


[1] Society of Actuaries November 2016 LTCI Pricing Study – https://www.soa.org/globalassets/assets/files/static-pages/sections/long-term-care/ltc-pricing-project.pdf