Long-term care insurance (LTCI) is a relatively expensive product, with annual premiums climbing up to $2500 or $5000 per couple. As such, most producers are careful to market the policy only to those with the financial fortitude to afford such coverage.
Now, however, the new price index from the American Association for Long-Term Care Insurance—and how it’s being used by insurers—may mean producers need to take a different approach altogether when it comes to sales.
The new price index reflects gender-based pricing, something that wasn’t used before. Given that women typically live longer than men and use more LTCI during their lifetime, female policyholders will now be expected to pay more for the same coverage. Similarly, men may be getting something of a break.
According to a New York Times report, a 55-year-old woman in good health buying a new policy will pay about $1,225 a year in premiums. Men can expect to pay $925 for the same policy—a 30% difference.
The changes are already prompting challenges from women’s advocacy groups, and insurers and brokers specializing in the product are wary of backlash.
However, there may still be a way for producers to help female clients score premiums more similar to those of their male counterparts’.
Tom Riekse, Jr., managing principal at LTCI Partners in Lake Forest, Ill. pointed out that while gender-based pricing is reflected in individual policies, voluntary LTCI policies offered through the workplace are still gender neutral.
“If you’re a man purchasing [long-term care] from your employer, you may end up paying a little more than you would on your own,” Riekse said. “If you’re a woman, you may get a better deal from your employer.”
Employers can offer voluntary LTCI policies to employees through a payroll deduction at no cost to themselves. As such, it may be a good strategy for producers attempting to place coverage for couples and individuals.
Regardless of how producers source coverage, however, Riekse noted that selling LTCI is “not going to be a walk in the park.”
“It’s a niche product and [producers] won’t be product experts. They should really partner with a specialist,” he said.
