But this is not really the point. If I buy LTCi today I don't care what my policy would have cost 5 or 10 years ago. I care about what it will cost me 5 or 10 years from now. Are you saying that under the new rules there will be no future rate increases for a policy once I have bought it? It's these unpredictable future rate increases that keep me from buying a policy.Genworth currently sells LTCi (mostly through employers and direct to consumer).Many major players have exited the industry since then - Prudential, MetLife, John Hancock, Genworth (mostly). But my main point was about unexpected rate increases.You're a little behind.For an industry that knows everything to a certitude, the number of companies leaving the industry due to losses, or demanding 50% 70% or even 90% premium increases in a single year due to cost surprises sure has been high. I'll be self insuring.If costs go up 100% LTC insurance rates will NOT go up 100%.
Why? Because the insurance company knows exactly how much they will have to pay for each day of care 10 years from now, 20 years from now, 30 years from now, 40 years from now, even 50 years from now.
Most companies that stopped selling long-term care insurance stopped selling it around 2002.
Genworth is coming out with a new policy next year that independent agents, like me, can sell.
Regarding unexpected rate increases, any policy purchased today has all prior rate increases priced into it already. In other words, someone buying a policy today won't get the big rate increases from the past because today's policies already have the rate increases baked in.
First, here is the bad news:
Any long-term care insurance policy purchased today in your state is the most expensive long-term care insurance policy ever sold by that company in your state.
Second, here is the good news:
Any long-term care insurance policy purchased today in your state is the most expensive long-term care insurance policy ever sold by that company in your state.
Go ahead.
Read it again.
There is no typo.
The bad news is the good news.
The good news is the bad news.
The old (cheaper) policies had big rate increases.
The new (more expensive) policies already include all those rate increases in today’s pricing. That is why the new policies cost so much more than the older policies.
Insurance regulators do NOT allow any policy purchased today to use the old pricing assumptions. All policies purchased today must use the most current claims data and the most accurate pricing assumptions available to date.
Any policy purchased today must already include all the prior rate increases.
That means every policy purchased today is much more expensive than LTCi policies sold 20+ years ago.
For example, if the older policy sold by the insurance company cost $2,000 per year for “Z” benefits and that policy had an 80% rate increase, a new policy with “Z” benefits must be priced at $3,600 per year or more.
Here is how that is calculated:
$2,000 (older policy pricing)
plus 80% (older policy rate increase)
= $3,600 (new policy pricing)
For policies sold in states that have passed the Rate Stability Regulation, the pricing is even more conservative:
Under the Rate Stability Regulation, a policy with “Z” benefits must be priced around $4,032 per year or even more.
Here is how that is calculated:
$2,000 (older policy pricing)
plus 80% (older policy rate increase)
plus ~12% (pricing cushion/margin for error)
= $4,032 (new policy pricing)
That is why I wrote earlier, “Any long-term care insurance policy purchased today, in your state, is the most expensive long-term care insurance policy ever sold by that company in your state.”
That’s bad news, but it’s also good news.
So, you needn't worry.
All of those unexpected rate increases are already priced in today's policies.
Statistics: Posted by JS-Elcano — Tue Oct 01, 2024 7:44 pm — Replies 51 — Views 2169