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Long-term care insurance gets a wake-up call

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Life Health Professional | 28 Aug 2015, 08:15 AM Agree 0
Industry expert suggests carriers and advisors need to get with the program when it comes to selling LTC insurance because the need for it’s not going away
  • Lynda | 28 Aug 2015, 10:57 AM Agree 0
    I am retired but, when working, I could not find LTD insurance with any guarantee on pricing after the first five years. This made me very reluctant to buy it for myself. And I would not sell what I did not buy personally. Instead, I concentrated on building portfolios (including life and disability and critical illness insurance) that would hopefully bridge this need.
  • David Juvet | 28 Aug 2015, 12:56 PM Agree 0
    While it is an industry-wide standard for the long term care insurer to reserve the right to adjust rates after the first five years, the usual pattern is to simply introduce a new product. If an insurer repriced the already-issued policies it runs the risk that the healthy insureds within that block will simply apply elsewhere and,after issue,simply cancel their existing policies. Secondly,insureds can always reduce their covarage if the new,higher premium is unacceptable. Thirdly,insureds can compare the cost of paying the increased premium with having no insurance: the same analysis they made when they bought the policy, and no doubt concluding at that time that it made sense to pay for at least some of the cost of care via insurance.
    At some point there will have to be some degree of premium deductibility for this type of insurance. In the USA it is 100% dedcutible against income and is a $1 Billion/year industry.
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