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After A Big Settlement , Steady Sales For LTC Insurance
Reports of the demise of the long-term-care insurance industry have been greatly exaggerated . By Ben Mattlin
BACK IN MARCH 2023 , GENWORTH , THE NATION ’ S largest provider of long-term-care insurance by number of policyholders , agreed to settle a classaction lawsuit over premium increases . The terms of the agreement were that customers could either accept rate hikes or settle for less coverage .
The repercussions of the settlement are ongoing . But to industry insiders , one thing is already clear : Reports of the demise of the long-term-care insurance industry have been greatly exaggerated .
“ My LTC policy sales are steady ,” says Aaron Schindler , president of Care Concierge New York , a provider of long-term-care insurance services in and around New York City .
Most carriers don ’ t allow policyholders to alter their basic coverage in reaction to rate increases , he says , but they might offer the option of removing an expensive inflation-adjustment rider , which would effectively freeze the benefit potential at current levels . That ’ s one of the easiest ways clients can cut costs .
“ The inflation rider can account for 15 % to 20 % of the annual premium ,” he says .
Brian Gordon , president of Gordon Associates Long Term Care Planning in Bannockburn , Ill ., says the lawsuit hasn ’ t changed many of the policyholders ’ behavior . “ Unless a policyholder was inclined to make a change or cancel their policy prior to the settlement , we are seeing most elect not to accept any of the options [ offered by the settlement ] and maintain current benefit levels ,” he says . “ In my opinion , the biggest winners from the settlement are the lawyers who brought it .”
Hybrid Plans Remain Popular
For the past several years , the strongest growing area of longterm-care insurance has been the hybrid segment , Gordon says . These policies are linked to life insurance or annuities . “ We have more LTC options in the hybrid life or annuity side of the business [ than before ],” he says .
JUNE 2024 | FINANCIAL ADVISOR MAGAZINE | 53