As the long-term care insurance industry continues its efforts to restore stability and regain profitability, the latest shoe is about to drop: a new gender-based pricing structure that will mean men and women pay different premiums based on their gender. The first company to venture down the path is the market leader Genworth, which is anticipated to begin receiving approvals to issue new policies with gender-distinct costs as soon as April; once the changes take effect, it’s likely that most other major LTC insurance companies will follow suit as well, and the new cost structure may be an industry standard by the end of the year. The primary impact of the cost change will be women who apply for a policy as an individual; premiums are anticipated to be as much as 20% to 40% higher than for men when purchasing a comparable policy at a comparable age.
In the near term, this provides a unique opportunity for those considering a new LTC policy to buy one before the rate increase takes effect. Once the new pricing is in place, though, the only options may be to adjust the selected benefits to try to get premiums down to an affordable point, consider a hybrid LTC policy as an alternative (although such policies have challenges of their own!), or wait to see if the latest commission on LTC (required as a part of the fiscal cliff legislation) can come up with a new national solution to the country’s LTC woes. The upshot of the new gender-based pricing changes is that it may ultimately make LTC premiums more stable; accurate pricing reduces the risk of future premium increases for in-force policies. On the other hand, this also means the pressure is on to buy coverage sooner rather than later, as the cost for new policies continues to rise even faster than the increases for existing ones!