14% of Nursing Home Entrants Had LTCI

Mar 30, 2016

  1. Arthur Rudnick
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    Arthur Rudnick Moderator Moderator

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  2. Charpress
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    I'm actually surprised it is even that high.

    When I ask the question at seminars "How many of you have long-tern care insurance?" -it is probably about that percentage. However, I do notice that the younger the audience (talking 55 as being "young"), the fewer have LTCI.

    For the Depression era people and those soon after, LTCI was an easy sell. It just made sense for planners and for those who don't necessarily think their investments will take care of everything that comes down the road. Now LTCI is a more expensive proposition and there are sensible alternatives.

    I used to sell a good bit of LTCI -almost all through Alianz which had, to my mind, the best products at the time. I guess maybe too good, which is why they got out of the business. I sort of got away from LTCI at that point.

    I think the runaway cost of medical care absolutely screwed all the actuarial predictions on profitability for the companies. They either got out or raised premiums. Assuming 14% is a good number, I think that will crater to single digits and lower over the next few years.
     
  3. Mr_Ed
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    what are the sensible alternatives are to LTCi?
     
    Mr_Ed, Aug 10, 2016
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  4. Charpress
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    Life policies that let you tap into the death benefit for LTC needs.

    Annuities with income riders that enhance the income available for LTC needs.

    Faced with choosing between LTCI with rates that go up pretty much in step with age (and therefore in step with being more expensive when you are least able to afford the premiums) and the alternatives, I personally chose an annuity product that doubles the income available on the income rider if I or my wife are unable to perform 2 of the 6 activities of daily living, yada, yada.

    Not a hard sale to myself and to my wife -and I got a nice commission. :biggrin:
     
  5. Mr_Ed
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    are you under the impression that an LTCi premium can be increased just because someone reaches a certain age?
     
    Mr_Ed, Aug 10, 2016
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  6. Charpress
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    Uh, no I am not. I am aware that rates are increased in line with mortality and risk. Someone 82 is more of a risk than someone 62. That goes for initial policy rates going in, and it goes for rate increases.

    Are you under the impression that LTC carriers do not increase their rates once a policy is purchased?
     
  7. Mr_Ed
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    That is incorrect.
    LTC insurance companies have never been allowed to increase the rates higher because someone has attained a certain age.
    In fact, most of the cases where there has been a rate increase that was "age banded" the older ages got lower rate increases than the younger ages.

    The biggest problem here is that you don't seem to be aware that Louisiana changed the rules regarding LTC rate increases.
     
    Mr_Ed, Aug 10, 2016
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  8. Charpress
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    So, you are saying that no LTC carrier has been able to raise rates across the board based on age brackets? I guess Genworth has been getting some bad press for nothing. Increases were approved in 41 states -don't know about Louisiana.

    But let's cut to the chase. You are right that LTCI is not exactly my forte since I have not been involved directly since Allianz got out. What's that been, about 10 years?

    If younger ages were banded at higher rates than older policy owners, I would say that makes perfect sense. The younger policy owners are a risk for a longer period of time. But the fact the increase on the younger policy owner might have been higher does not make the older policy owner feel any better about his increase.

    Any way you cut this, the main problem with LTCI in my view is you don't know how much it is going to cost you in the future. This is not the fault of the carriers, it is simply a factor of health care inflation being so much higher than in other sectors.

    And yet I see the need for having LTCI as one of the possible solutions to the whole end-of-life scenario. The odds are great that all of us are going to spend the last 3 years (on average) in a very expensive care facility. That is why I've been asking about finding an FMO that truly handles LTCI, which I think you have done.
     
  9. Arthur Rudnick
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    Arthur Rudnick Moderator Moderator

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    originally posted by Charpress

    The cost of medical care really does not have an effect on the premiums of a long term care policy. Medical care is paid for by health insurance policies not LTC policies. And, if you want to include a nursing home, home care or assisted living as part of "medical care" you're still wrong.

    If someone has a policy that pays $200/day, that's the most in benefits they will receive. It doesn't matter to the carrier whether the actual cost of care is $200, $300, $400 or higher. Their exposure is only the maximum stated in their policy.

    Personally, (no offense) I don't think you have a clue as to what the LTCi business is all about. You admit you have not not sold a policy in 10 years. I'm not sure how well versed you were 10 years ago, but the business has changed dramatically since then.

    BTW, Allianz offered a good policy, there were many other carriers that offered better policies at less premium.

    You need to get your facts straight before you start posting on a LTC Forum. Most of the members here are LTC specialists and cannot be fooled by incorrect facts & figures, especially coming from someone who appears to be making those numbers up.
     
  10. ltcadviser
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    Arthur, Allianz Generation Protector was a good contract, and it was priced very well at the Preferred health bands. Whether or not policies were less premium than Allianz years ago is somewhat irrelevant now because the rate increases are the most important issue which determines a policy's long term value. Allianz has actually treated policyholders decently compared to other unnamed underwriters. And the Allianz pricing was fine.

    ----------

    I will respectfully disagree with you here. An LTC policy, even assuming a rate increase or two (and a few highly rated companies have never once raised any rates) are much better LTCi options (duh) than an annuity with an income doubler or a life policy with a chronic illness LTC rider.
     
    Last edited: Aug 10, 2016
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