A Changing Market for Long-Term Care Insurance

| March 03, 2023

The pandemic has changed a lot of things about our lives. One of those changes concerns our attitudes about long-term care insurance (LTCI). According to a Forbes article, during the pandemic people have inquired more about LTCI, presumably because they realize they might need it suddenly.

I’m not surprised that the interest in LTCI is growing. Our society is aging, and as a result health care is becoming a more important issue. LTCI is a valid option for many people, and although it isn’t cheap, this insurance offers several important benefits.

The financial protection might be the most important one. If you have loved ones who have needed any kind of extended care, whether it’s in the home, at a nursing home, or in an assisted living facility, you know how expensive this care can be. And many health insurance policies won’t cover it, so the drain on your savings can be significant.

If you don’t have family that can help provide long-term care, LTCI also provides assurance that you’ll have options for care. On the other hand, even if you do have family that’s ready and willing to help, maybe you feel that you’ll be burdening them. In fact, a significant number of Americans are in the so-called sandwich generation: They’re raising a minor child or financially support an adult one, and they’re providing care and financial help to someone over the age of 65.

The big question is how much LTCI will cost. The market over the years has changed, as many insurers that began offering these policies decades ago—when it was known as “nursing home insurance”—have left the market. The main reason is that policies weren’t as profitable as expected.

The National Association of Insurance Commissioners estimates that the number of LTCI insurers dropped from about 100 in 2004 to about a dozen in 2020. You don’t have to be an economics major to understand what happens to pricing when an increasing number of people are interested in a product being offered by fewer firms.

One key is to get premiums when you’re younger (and presumably healthier). Rates will increase as you age and are more likely to need long-term care.
According to NAIC, other factors that might influence your decision to obtain LTCI include:
Gender: Women have longer life expectancies than men and therefore are more likely to need long-term care.
Family situation: Paid care might be your best, or only, option.
Health status: If your family history includes long-term care situations, you might be more likely to need it yourself.

The decision to purchase LTCI is a major one. We’ve talked to a lot of clients about it and the goal is make sure any policy is appropriate for their situation. Fortunately, more varieties of policies are available today to help make sure that’s the case.

According to the U.S. Department of Health and Human Services, most of the elderly will need long-term care at some point. So there’s a decent chance you’ll need it, too. It’s well worth your time to consider the benefits of a policy.