Each year, Broker World Magazine publishes a survey of LTC Insurance- if you are an advisor it is well worth checking out, as almost every significant LTC carrier participates in the survey and leading actuaries
Highlights (U.S. stand-alone LTCI market):
- Claims – the industry incurred $7.7 billion in claims in 2012… over $81.2 billion since 1991. People are getting significant value from policies.
- Sales – industry sales were down from 2012, although demand is high. Informal caregiver services were valued at $450 billion per year in 2009 - up from $375 billion in 2007. In addition, more advisors and their clients are beginning to hedge LTC risk (lower benefits) vs. total risk transfer (higher maximums).
- Carriers – currently 16 carriers offer stand-alone LTCI solutions (compared to 45 in 2008). LTCI Partners is aligned with 5/6 top carriers (ranked by annual premium).
- Buyer Characteristics –
Average issue age - 56.8- Target market – 74.1% of buyers are betweenage 45-64
- Average monthly maximum benefit - $4,830
- Compound inflation – sales of 5% compound finally dropped. There’s a higher chance of a significant rate increase with 5% compound (due to interest rate sensitivity - carriers who guarantee 5% growth when they earn less than 3% on their 10-year treasuries). Not to mention 5% compound almost doubles the premium from a 3% factor with many carriers. We’re starting to see more policies with lower compounding rates or a deferred/future purchase option.
- Shared Care Rider – about 40% of couples opted to buy the shared care rider. This rider has become increasingly popular with the lifetime benefit practically disappearing.
The survey also includes rate comparisons of products.