Unlimited Long Term Care Insurance Policy Benefit Changes Explained

Several leading long term care insurance companies have announced they will no longer make available policies offering consumers unlimited or lifetime benefits.
“The decision is being driven by the current historic low interest rate environment,” explains Jesse Slome, executive director of the American Association for Long Term Care Insurance.  “You can’t offer a benefit like long term care insurance where the payout could easily be several million dollars and keep the price you charge something people will pay.  So, for now, unlimited policies are no longer an economic reality.”

Between 40-and-60 percent of the dollars an insurance company accumulates to pay future claims as well as costs comes from the premiums paid annually by policyholders.  “The rest, roughly half, comes from investment return from bonds and other instruments,” Slome notes.  “When yields drop as they have over the past few years, insurers have to charge more for policies and you reach a point where you simply price a feature out of the reach of people.  No one sells cars today that get 10 miles per gallon because no one would buy them, and the analogy is similar.”

The nation’s long term care insurance expert explains that long term care insurance policies have changed since being introduced in the late 1980s.  “The original versions only paid for nursing home care, while today most pay benefits for care in one’s own home or assisted living communities,” Slome adds.  “Things change, economies change and when interest rates rise again one day I would expect to see that impact the design of long term care insurance coverage being offered.”

Consumers who desire longer periods of benefits today can still purchase coverage to achieve that.  “Couples can each purchase a policy providing 10-years of benefits and add a shared care option which effectively yields a 20-year plan of protection,” Slome notes.

When considering longer duration policies which are always the most expensive, the Association advises consumers seek out a knowledgeable long term care insurance professional designated by the Association.  To connect with one call the Association’s Los Angeles-based national headquarters  at (818) 597-3227.  You can also access informative guides authored by Slome on reducing long term care insurance costs via the Association’s website.

Share and Enjoy:
  • Print
  • Digg
  • del.icio.us
  • Facebook
  • Google Bookmarks
  • Add to favorites
  • LinkedIn
  • Reddit
  • StumbleUpon
  • Twitter
  • Slashdot
  • Technorati

Tags: , , , , ,