We are linking to another piece highlighting the attractiveness to many consumers of hybrid long-term care products in contrast to stand-alone long-term care insurance. This recent Barron’s article, “Not Everyone Needs to Buy Long-Term Care Insurance. Here Are Some Considerations,” explores some of the considerations when consumers are looking to buy long-term care insurance, including premium costs, benefits payouts and availability of more policy options.
When it first became popular in the late 1980s, long-term care insurance was cheaper and usually more generous than the policies being sold today. It turned out that insurers had underpriced coverage. They overestimated the lapse rate, for the percentage of customers who would let their policies lapse before filing claims, and they underestimated how long people would require long-term care. Insurers were forced to jack up rates. Some exited the market.
Most of the insurance being sold today has more restricted guarantees, and insurance experts are hopeful that the companies won’t seek big premium increases in the future.
Consumers should understand what costs are covered when they buy long-term care insurance.
Read the full Barron’s article (subscription required).