Long-term-care insurance policies written now should not be subject to the huge rate increases that have plagued coverage in the past, according to the American Association for Long-Term Care Insurance.
Rates are now based on different actuarial standards and should hold up into the future, said the association. The association asked 80 insurance actuaries to evaluate policies written in the last two years and 79.1 percent of the actuaries said there was a risk of rate increases of 10 percent or less.
“Policies priced years ago using different assumptions have seen rate increases, so consumers today assume they face the same risk,” said Jesse Slome, director of the association. “That's simply not the case.”
“Back in the 1990s, long-term-care insurance was a new form of protection and there just wasn't the data available” to set realistic rates, Slome said. “With several decades of experience and millions of policies sold and hundreds of thousands of claimants, policies priced today can more accurately project important aspects” of the market.
People will still be able to buy a policy for $100 to $200 a month, but some options that were offered in the past are no longer offered. Insurance companies also were forced to raise rates in the past because the low interest rate environment that prevailed for a decade reduced insurance companies’ return on their investments, Slome said.
Others have expressed a more pessimistic outlook for long-term care insurance. Genworth, the country’s largest writer of long-term-care insurance, recently raised rates 58 percent in more than half the states. This was on top of 28 percent increases in each of the last two years.