Long Term Care Insurance Rates Account For 2013 Change

The impact of the changing reserve requirements for long term care insurance has generally already been taken into account and isn’t expected to create further rate increases starting next year according to Jesse Slome, executive director of the American Association for Long-Term Care Insurance.

“We’ve had several recent calls from consumers after being told by a financial planner that rates for insurance would ‘increase significantly’ in 2013,” Slome explains.  “The new discount rate will have minimal impact on long term care insurance and in many cases has already been taken into account by insurers.”

According to Slome, the ‘valuation discount rate’ used for calculating statutory reserves or capital requirements for long term care insurance is dropping from 4 percent to 3.5 percent for new business starting in 2013.  “The rate is tied to Treasury yields based on a complicated formula,” Slome notes.  “It automatically updates when new money rates change over a period of time.”

Five-year Treasury rates are at historic lows (0.62%) and 10-year yields are at 1.59 percent as of September 4, 2012.  “By comparison, both five and 10-year rates were 4.68 percent on January 1, 2007 and 2.65 percent and 4.60 percent as recently as January 4, 2010.

“Low interest rates have been the primary cause of increasing rates for long term care insurance and have impacted other insurance lines including fixed annuities as well as life and disability insurance,” Slome states.  “To compensate for every one percent decline in interest rates which equates to lower investment income, an insurer needs a 10-to-15 percent increase in premiums.   The drop in just the past two years has had an enormous impact.”

The Association reports that the changing reserve requirements that take effect January 1^st are designed to provide added protection to policyholders.  “The half percent drop in reserve rates will have a nominal impact on premiums,” Slome.  “The impact depends on a policy’s duration but is in the two-to-five percent range.”

The American Association for Long Term Care Insurance was established in 1998 to advocate for the importance of planning for long term care and to support insurance and financial professionals who market LTC insurance.  To learn more about long term care insurancecosts call the organization’s offices at (818) 597-3227 or visit the Association’s website.

New Report Lauded By Long Term Care Insurance Industry Executive

The executive director of the American Association for Long-Term Care Insurance cited a new report that called further attention to the sever economic strain America’s aging population will place on federal programs such as Medicare and Social Security.

According to the report by the National Research Council and funded by the U.S. Treasury, there are options that can help the nation avoid what others call a very grim reality.  “As a nation we need to act sooner rather than kicking the can further down the road,” declares Jesse Slome, executive director of the nation’s long term care insurance industry trade group.  “Waiting will only make the matter worse and the cure that much more severe, and yet we seem to be willing to bury our heads and avoid what expert after expert predicts.”

The report notes that the aging of the American population will pose continuing economic challenges for the country for decades to come.  According to the report, the ratio of adults aged 65 and over compared with people aged 20 to 64 will increase by 80 percent in the coming decades.

Experts explain that the shift is partly the result of increases in average life expectancy which has risen from 47 years in 1900 to 78 years today.  According to Slome, life expectancy continues to grow and is projected to be 84.5 years by the year 2050.

“America is rapidly becoming an aged nation without a plan for dealing with the needs of our people and their families,” Slome concurs.  “Declining birth rates among younger people means a smaller proportion of the population will be under 65.”

The report mandated by Congress notes that while some people have saved amply for retirement, between one-fifth and two-thirds of today's seniors have not saved enough, leaving them to rely heavily on Medicare and Social Security -- programs that, along with Medicaid, now account for about 40 percent of all federal spending.

Medicare, Medicaid and Social Security account for roughly 40 percent of all federal spending and 10 percent of the nation's gross domestic product according to the authors of the report.   The report outlines strategies including increasing the retirement age beyond the currently accepted age of 65 years.   A second strategy called for workers to increase their savings in order to have more resources when they retire.

“We’ve called on both Presidential candidates to address the long term care problem facing aging Americans,” Slome notes.  “We believe tax incentives are a way to get more people to pay attention and to plan.  We praise the authors of this report and Congress for requesting the study but it’s time to take action, talking will not fix this problem.”

The American Association for Long Term Care Insurance was established in 1998 to advocate for the importance of planning for long term care and to support insurance and financial professionals who market solutions. To learn more about long term care insurance costs call the organization’s offices at (818) 597-3227 or visit the Association’s website.

Long Term Care Insurance Difficult To Get After Age 80

According to the U.S. Department of Health and Human Services some 5.5 million Americans were age 85 or older in 2010 with the number expected to grow to 6.6 million in 2020.

“Americans are living long lives but few have prepared for the consequences that come with living into your 80s, 90s and even past age 100,” declares Jesse Slome, executive director of the American Association for Long-Term Care Insurance, the industry trade group.  “When it comes to retirement planning, people get they can’t start preparing and saving for a comfortable retirement at age 60.  But, this is really the first generation to face the reality of living long lives and few have done any preparation for the consequences.”

The nation’s long term care insurance expert notes that after age 80 purchasing long term care insurance can be a daunting, almost impossible task.  “The major insurers have ceased offering coverage to those over age 80 because few people would agree to pay the premiums and even fewer could meet the health qualifications,” Slome explains.  “It is no different than trying to buy home owners insurance after your house has burned down.  You can’t get it.”

Several smaller insurers continue to offer long term care insurance policies to those over age 80.  “You can expect to pay $1,000 or more a month for coverage but considering you may be looking to get over $165,000 in benefits, that’s a considerable value,” Slome explains.  “But even those willing to pay this amount generally can not meet the health qualifications.”

“Long term care insurance is only available to those individuals who can health qualify,” Slome adds.  “This is done so to avoid having those who are in good health subsidizing rates for those who are in poorer health and are the ones most likely to begin claims sooner.”  Slome advises that the ‘sweet spot’ for looking into this protection is between ages 52 and 64.  “Do it before you qualify for Medicare and have access to preventative health screens that may uncover conditions which make it impossible for you to obtain long term care insurance or to pay higher premiums,” Slome concludes.

The organization maintains the nation’s most comprehensive website containing the latest data from Association conducted studies of buyers and claimants with long term care.  To learn more or to connect with one of the Association’s staff for long term care insurance costs, call the organization’s offices at (818) 597-3227 or visit the Association’s website.

Long Term Care Insurance Expert Shares Savings Tip

Roughly eight million American adults relocate to a new state and millions more have residences in two states; both situations that could reduce the cost for long term care insurance according to an expert.

“Rates for identical long term care insurance coverage can vary by 10 percent or more depending on where you reside,” explains Jesse Slome, director of the American Association for Long-Term Care Insurance one of the nation’s leading long termcare insurance experts.  Slome was answering a question for a Tennessee resident planning an imminent move to New York.

“A comparison of costs for a plan providing roughly $165,000 of coverage found that he would pay roughly 13 percent less if he waited to apply in New York,” Slome advised.  “We explained he needed to speak with a knowledgeable expert licensed in both states so he could learn of any important considerations.”

According to the Association while most insurance professionals are licensed only in the State where they do business a growing number of long term care insurance professionals who specialize in the product are available in multiple states.  “A growing number of specialists will consult with people over the phone, something which many prefer compared to an in-home appointment with an insurance agent,” Slome adds.

The Association compared rates for three leading insurers offering policies in multiple states.  “The cost for coverage from one company was about $910-per-year for a 55 year old living in New York but $1,035 for identical coverage for someone in Tennessee,” Slome notes.  “Insurance companies today tend to require some proof of residency,” he adds, “for example, they will base coverage on the state issuing your driver’s license.”

To connect with one of the Association’s professional members who are licensed in multiple states and able to provide free no-obligation long term careinsurance comparisons quotes and information on the topic all the organization’s national headquarters at (818) 597-3227 or visit the Association’s website.

Long Term Care Insurance Association Opens 2012 Sales Achievement Awards

The Long Term Care Insurance Sales Achievement Awards is now open for entries effective  January 1, 2012. 

The yearly award based on 2011 sales is organized by the American Association for Long-Term Care Insurance (AALTCI), the national trade organization.  The 2011 award ranked producers from all states broken down into categories including individual LTC insurance, multilife long term care as well as sales of asset-based annuity and life insurance products offering long term care benefits.

The awards are designed to recognize and celebrate outstanding achievements by long term care insurance producers working to educate and help protect Americans.  “From those producers just starting out to the many seasoned specialists, there’s no more passionate and hard-working group of professionals than those selling long-term care insurance protection,” explains Jesse Slome, AALTCI’s executive director.

A special “Rookie of the Year” category now recognizes those producers who first started selling in 2011.   A key component of the awards program is the State-by-State ranking.  “This gives 50 agents the opportunity to show that they are number 1 in their particular state,” Slome explains.  “That’s certainly a powerful marketing tool and these leaders are often called on to teach others and share their knowledge.”

Online applications are available at www.aaltci.org/awards.  The closing date for free entries is February 29.

Established in 1998, the American Association for Long-Term Care Insurance is the national trade organization that supports insurance professionals as well as conducts awareness programs to educate American adults about the importance of long-term care planning.  

2009 Long-Term Care Insurance Price Index Announced

A 55-year-old individual considering long-term care insurance protection can expect to pay $723-per-year for a base level of protection if they are married or $1,060 if they are single according to the 2009 Long-Term Care Insurance Price Index published by the American Association for Long-Term Care Insurance.

Across various age groups, costs for coverage increased about two percent from the prior year. The index published annually measures costs for top-selling long-term care insurance policies that offer consumers approximately $115,000 in current benefits, with protection increasing yearly as the individual ages.

"A solid base plan of protection will grow in value to over $305,000 of protection 20 years from now," explains Jesse Slome, Executive Director of the national trade organization that conducted the research. The study compares costs for different levels of plans that provide long-term care benefits for 3-years or longer with a compound inflation option that increases the available insurance benefits by five percent compounded each year.

"For some age bands the cost of long-term care insurance actually declined," Slome notes. "What we did see is a far wider range of prices between insurers offering basically the same coverage." According to the Association study, costs can vary by as much as 100 percent. "This could reflect different benefits or simply the individual insurer's pricing assumptions," Slome explains. "Consumers should compare policies or work with a knowledgeable insurance professional who can analyze for them."

Lower Interest Rates Impact Costs For Insurance Policies

The cost for long-term care insurance is closely related to interest rates that have significantly declined in recent years. "Investment income comprises between 40 and 60 percent of the dollars used to pay eventual long-term care claims," Slome explains. "Premiums paid by policyholders make up the other portion and as interest rates have declined, insurers have found it necessary to raise premiums for protection." The industry paid out $5.8 billion in claims in 2008 to some 180,000 policyholders.

"The cost of long-term care insurance is directly related to how much protection you purchase, the age you first apply and your health at the time of application," explains Slome. "Over half of all individual applicants are between ages 55 and 64, and one third purchase a daily benefit of between $100 and $149." The daily benefit amount actually equals either a cash benefit or a pool of money that the policyholder can access. Most insurers offer significant discounts when both spouses apply for coverage.

The survey compared costs for individuals age 55 with those age 65. "A married individual purchasing $172,000 in current protection will pay about $20 a week ($1,084-per-year) by qualifying for available good health discounts," Slome explains. "By waiting until they are age 65, they'll likely pay $63-a-week because they will need to buy more coverage to keep pace with inflation and will likely no longer qualify for the good health savings."

Long-Term Care Insurance Association Study Looks At Buyers of Life Insurance Plus LTC Benefits

Los Angeles, CA - June 23, 2009 -- Nearly half of individuals purchasing asset-based long-term care protection in 2008 were under age 65 according to the first national study of buyers. Two thirds (66%) of purchasers were women and the average single premium paid was just under $71,000 ($70,975). Research conducted by the American Association for Long-Term Care Insurance (AALTCI), the national trade organization, examined 2008 sales data for over 5,000 new policies.

"Asset-based long-term care insurance protection is becoming an increasingly popular way for individuals to protect against the risk," explains Jesse Slome, AALTCI's Executive Director. Asset-based long-term care policies offer the dual benefit of access to long-term care benefits as well as life insurance protection. "Many individuals find this coverage attractive because if they don't use their long-term care protection, their beneficiaries still benefit from the life insurance coverage," Slome explains.

The average single premium paid for an asset-based LTC policy in 2008 was $70,975, according to the Association study. This represented a four percent increase compared to 2007 when the average premium was $68,300. Just under half of policies (49.7%) had a base face amount of between $100,000 and $200,000. Some 30 percent had a face amount of life insurance protection of between $50,000 and $100,000. "Policies offer a long-term care insurance protection in multiples of the life insurance benefit," Slome explains.

Purchasers of asset-based LTC policies were almost equally divided between pre-65 (49%) and 65-or-older (51%). Just over 10 percent (11.2%) of purchasers were between ages 45 and 54. Exactly two-thirds of purchasers were women (66%). "Buyers are older than individuals purchasing traditional long-term care insurance protection," Slome notes. According to the Association's study, some 84 percent of buyers of traditional LTCi protection in 2008 were younger than age-65.

Asset-based long-term care protection and traditional LTC insurance policies share the requirement that applicants health qualify for coverage. The percentage of accepted applicants declined with age according to the study's findings. Some 70.2 percent of submitted policy applications by individuals between 45 and 54 were accepted. The percentage declined to 60.5 percent for applicants between ages 65 and 74.

"We anticipate the market for asset-based long-term care protection will increase in the years ahead," predicts Slome. "Leading insurers such as Genworth Financial and Lincoln Financial Distributors are focused on the growth of this market and policy sales."

The American Association for Long-Term Care Insurance is the national organization serving insurance and financial professionals who provide long-term care financing solutions. Consumers can obtain information from the organization's Consumer Information Center, the nation's leading resource for LTC insurance information. Insurance agents and financial professionals can visit the organization’s online Producer's Resource Center at www.aaltci.org.