LTCi Rates Are Stable

On June 27, 2016, I attended a landmark long-term care insurance (LTCi) presentation. It took place at the www.NAHU.org Convention in Albuquerque, NM. My colleagues and I produced the session as part of our work on NAHU’s National LTC Advisory Committee. Actuaries spoke in clear, lay language and explained why very sound, long-range actuarial evidence indicates today’s LTCi policies should be very immune to future rate hikes. The actuaries giving the talk do not work for a particular LTCi carrier; they are members of the Society of Actuaries (www.soa.org)

I have written about LTCi rate hikes before.

The reasons actuaries are very confident today’s LTCi policies will suffer few, if any rate hikes are:

• Current LTCi pricing assumptions are based on claims data that is much more extensive now than existed just a few years ago.
• Current LTCi policies are priced to insulate against future rate hikes. Today’s LTCi rates are higher than they were 14 years ago but still reasonable.
• Competitive LTCi plans now have prices that are much closer to each other than they used to be. This indicates actuaries agree on what carriers will experience.
• Today’s LTCi rates have been priced with much lower policy lapse rate assumptions (0.6% lapse rates).
• Today’s LTCi rates are now based on today’s very low investment performance (4.6% interest in all policy years).
• Today’s LTCi policies are required to assume claim rates that are at least 10% higher than are actually expected.