COVID-19 Impact on Long-Term Care Insurance 2020 Survey

What impact did COVID-19 have on the long-term care industry (LTCi) early on? The Society of Actuaries (SOA) recently released a survey trying to answer that question by detailing COVID-19’s impact on LTCi mortality, voluntary lapse and morbidity experience. General findings from the survey were stated as follows:

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More Americans Taking on Role as Caregiver

An aging boomer population, limitations or workforce shortages in the health care or long-term services and supports formal care systems, and the ongoing pandemic are some of the reasons why more and more Americans have found themselves serving as unpaid caregivers for family members or friends.

Not only are more Americans taking on the role of unpaid caregiver, but they are doing so for adult recipients who may have increasingly complex medical or support needs. More than 60% of caregivers report in a 2020 AARP survey that their adult care recipient needs additional help due to long-term physical conditions, while about one-third cite memory problems (such as Alzheimer’s or dementia) as the reason. The on-going pandemic also continues to shape aging-in-place (i.e. at home) demand for services, including home health aides.

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LTC Providers Significantly Impacted by COVID-19

In a recent article for LTCi Insider, Margie Barrie, an insurance agent with ACSIA Partners, helps contextualize COVID-19’s especially significant impact on long-term care providers, including nursing homes, assisted living facilities and carriers. Based on her own survey as well as data from the American Health Care Association (AHCA) and the National Center for Assisted Living (NCAL), Ms. Barrie explains that nursing homes and assisted living facilities have been hit particularly hard, and she outlines several contributing factors.

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Long-Term Care Insurance Market Updates

We write on a few articles from the past week that we found interesting.

A recent article from Susan K. Neely, President and CEO of the American Council of Life Insurers, “Helping Older Americans Stay in Their Homes,” looks at challenges facing the long-term care insurance market as COVID-19 concerns continue and more and more people consider long-term care their greatest financial concern behind retirement savings. She also discusses how lawmakers are looking for ways to help more people get long-term care insurance.

Read the full ACLI IMPACT article.


In addition, we want to bring your attention to a new Best’s Market Segment Report, “U.S. Long-Term Care Product Performance Pressures Continue.” According to the report, from credit reporting agency AM Best, loss ratios in the LTCi market continue to climb and “poor performance from inadequate pricing is a significant issue for LTC insurers, owing to low interest rates, lapse rates, improving mortality, rising morbidity and policyholder utilization assumptions.”

The Report also looks more closely at certain factors driving rate increases nationwide, the evolution of combo products to meet growing coverage demand and efforts of the National Association of Insurance Commissioners to stabilize the LTCi market. Although, “AM Best views this as a very difficult task given the state-by-state insurance regulatory structures in place, and expects continued use of closed blocks to separate the legacy liabilities from the new ones in order to increase transparency to outside users of financial statements. AM Best also expects LTC insurers to trend toward simplified policy design and fewer assumptions embedded in their policies. Along with carriers slowing down on offering lifetime benefits coverage and inflation-adjusted features, insurers may also soon begin to disregard lapse rates as an underlying assumption for product pricing.”

Read Best’s Market Segment Report. (Subscription Required).


Finally, in “How low interest rates are changing LTC Insurance products,” Tom Rieske, Jr., Managing Director of LTCi Partners, discusses historical trends in LTCi sales (i.e., the trend toward sales of hybrid life and LTC insurance products) and recent reactions to the persisting low-interest rate environment (e.g., development of a hybrid IUL policy with LTC coverage).

Read the full LTCi Partners article.

Considerations When Buying Long-Term Care Insurance

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.

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Part I: InsurTech Movement Shakes Up LTCi Vendor Composition

Compared with other insurance lines and financial services[1], the InsurTech movement had been relatively slow in impacting LTCi. That inertia recently gave way to a bourgeoning group of companies targeting LTC insurers and providers, demanding a first-of-its-kind LTC Tech Summit (presented by the SOA and Maddock Douglas) on November 7, 2019. In anticipation of this year’s Virtual Elder Tech Summit next week, it is worthwhile to look back at some of the next generation vendors that presented last year.

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Long-Term Care Insurance: A Comprehensive Guide to Costs, Coverage, and Whether It’s Right for You

Wanted to share this interesting article from Money – it provides a good overview of the perspective of the broker community on why stand-alone LTCi remains a viable product, including their view that now is a great time to buy! It also provides worthwhile nuggets on combination products and partnership programs.

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Future of Dementia

There is a possibility that the structural and financial costs of caring for elderly Americans will become the issue that overwhelms all others in importance in the coming decades.  Among the myriad issues and problems facing the United States at present, many politicians and policymakers have focused on issues that appear more immediate. As they do, however, the United States grows older and more infirm, all while birth rates fell to 1.73 births per female in 2018 and net immigration has fallen to the lowest levels this decade. Given the aging baby boomer generation, the current scenario has all of the makings of a serious demographic crisis. Among an aging population, dementia has become a very prevalent, very difficult, and very expensive illness that many confront, and so far little progress has been made on a cure.  Indeed, The Economist, in its August 27, 2020 edition, published a special report on dementia that included the following statistics:

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