Tuesday, October 13, 2015

LTCi in the News

Item the 1st:

Northstar State bureaufolks are contemplating how they'll respond to recent (and often dramatic) Long Term Care insurance rate hikes. The good news?

"Over 99 percent of the policyholders have kept the policies, even with the increases"

On the other hand, venerable insurance wonk Joseph Belth castigated the industry, remarking that "there are many reasons why private insurance cannot be a good solution for handling LTC risk ... the probability of loss is high, knowing whether a covered loss has occurred is open to debate"

Um, not really, Doc: the contracts (and insurance policies are contracts) specifically identify triggers, and there's no evidence of widespread bad-faith claims denial.

Item the 2nd:

Meanwhile, in California, Gov Jerry Brown has signed off on legislation that tweaks how non-forfeiture benefits are handled. LTCi plans allow policyholders faced with rate increases to elect alternate benefits, such as a shorter payout timeline, or lower daily benefit amounts. The new law tightens up insurers' notification obligations.

Item the 3rd:

FoIB Jeff M alerts us to this report on the causes behind many policy lapses:

"Cognitively impaired individuals are more likely to allow a long-term-care insurance policy to lapse even though they're more likely to need long-term care ... less wealthy households allow their LTC policies to lapse more frequently, due in part to inability to continue paying insurance premiums"

As to the first, this is puzzling: all LTCi applications include the name of a 3rd party who would receive notification if a policyholder was behind on premiums. I can't imagine a scenario where that would be left blank (although, I could see where a change might not be communicated to the carrier).

The second is more nuanced: yes, premiums increase. But (as noted above), policyholders are offered various premium reduction options. Still, there's no perfect answer.
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