For the past few years, Covid has made everyone think a little harder about mortality and health. But now that the worst of the pandemic seems to be behind us, how has it affected long-term-care (LTC) insurance?
Increased Interest
“We have definitely seen an increase of LTC insurance inquiries since the summer of 2020,” says Brian Gordon, president of Murray A. Gordon & Associates/MAGA Ltd., an LTC specialist firm in Bannockburn, Ill.
Many clients who had rejected long-term-care coverage in the past, he says, came back with a change of heart. “We generally see clients … between the ages of 48 and 62, but since Covid we’ve been receiving more inquiries from people 70 and older,” says Gordon.
Many of them may be out of luck, however—or at least they were in the early days of the coronavirus.
Tougher Underwriting
It’s too soon for any hard data on the lasting effects for the industry, but Covid did make it tougher for applicants to pass the underwriting requirements. “Some insurers have expanded the list of pre-existing conditions that will disqualify an applicant,” says Melissa Ciotoli, managing director and senior wealth advisor at GYL Financial Synergies, a firm based in West Hartford, Conn.
People from certain regions were denied coverage, too. “Insurers are looking very closely at applications coming from areas of the country known to have high Covid infection rates,” says Kimberly Foss, founder and president of Empyrion Wealth Management in Roseville, Calif. “In many cases, such applications are being turned down, along with those from persons who have traveled to certain countries.”
This increased scrutiny led to more in-person medical exams, says F. Michael Zovistoski, managing director at UHY Advisors NY in Albany, N.Y. “LTC providers have needed to better assess risk relating to new applicants,” he adds. Many carriers “included various new questions in their applications, [questions] related to comorbidities, Covid exposure and foreign travel, to mention just a few,” he says. “All these factors weigh into more applications being turned down.”
Lower Maximum Ages And Longer Waiting Periods
At the same time, the age restrictions on these policies tightened. Older applicants always require more stringent reviews to qualify for coverage, but the rules became even more unforgiving during the pandemic.
“When states issued stay-at-home orders and insurers couldn’t conduct in-person exams, many [carriers] reduced the maximum age for applicants,” says Ciotoli at GYL Financial. “Some temporarily stopped accepting applications from people in their late 60s or early 70s, and a few reduced the maximum age to as low as 65.”
At Nationwide, for instance, which doesn’t offer stand-alone long-term-care policies but does have a variety of LTC riders and other linked-benefit or hybrid plans that offer both life and long-term-care coverage, the maximum issue age was lowered from 75 to 70—though the carrier says that had more to do with low interest rates than Covid. “We rely on interest income to pay for LTC benefits,” says Kathy Pemberton, Columbus, Ohio-based senior director of life product development for Nationwide. “A policy issued to a 75-year-old is too close to the expected age of needing care”
In addition, many carriers put a waiting period on coverage, especially if a client ever tested positive for Covid. “If you have had Covid, there is a 90-day waiting period, and a six-month waiting period if you have been hospitalized with Covid,” says Eric Bond, founder and wealth advisor at Bond Wealth Management in Long Beach, Calif.