There’s little debate over the issue: in the past, insurance companies sold too many long-term healthcare policies based on optimistic funding expectations.
Clients received an apparent bargain and gained assurances that they’d be properly cared for in retirement. Curiously, the stubborn tendency of contemporary people to live a very long time has been breaking the back of insurers. Something had to give.
The individual states must approve substantial increase in insurance premiums and across the country, they’ve shown a willingness to do so. Our featured author, Greg Iacurci, a reporter covering retirement planning and insurance issues, says that underwriters are happy with the way state regulators have been responding. Customers for LT-care policies and the agents who sell them are less sanguine, he notes.
The rate increases are nothing new in themselves: insurance companies have been hiking premiums for existing customers for many years. However, the latest developments suggest staggering rises – even as much as 300% – could become the new normal. Clients may have to choose between accepting a punishing premium hike, reducing benefits or simply dispensing with long-term care policies. The latter step could be a dire one.
Thomas McInerney, CEO of Genworth Financial Inc., confirms that until around 2014, triple-digit premium hikes were uncommon. This has now changed and customers can expect a shock. States are allowing these rises for a simple enough reason: they recognize that insurers cannot survive without them.
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States approving bigger rate increases for long-term care policies | Investment News