Long-term care insurance (LTCI) has evolved over the years since it first launched. By the late 1980s and 1990s, long-term care insurance became a hot commodity. But little did the insurance carriers realize just how many people would use their policies. This miscalculation likely lead to policy series rate hikes and new policy benefit changes. These changes made policies more sustainable for insurance companies and more reliable for consumers.
More Options for Care
What started as just a nursing home policy evolved over time as people wanted more options for care. In 1990, 63% of policies only covered nursing home care. Today, 99% of policies also include home care and facility care benefits. Additional built-in benefits or riders help policyholders get access to home care funds faster to help them stay at home longer.
Better Inflation Protection
The cost of long-term care will be drastically higher 20-30 years from now. In 1990, only 40% of policies sold inflation protection. Today, 75% of policies offer some form of inflation protection to increase the benefit over time.
Inflation options have also expanded to be more affordable and sustainable than the once popular 5% compound inflation. To offer protection while keeping premiums down, carriers offered 2-4% compound inflation or step-rated inflation allowing policyholders to increase coverage over time.
Shorter Policy Durations
Early policies offered lifetime durations leading to expensive carrier payouts and likely contributed to steep rate increases on certain policy series. Carriers have since eliminated lifetime durations, and the average purchased durations dropped from 5.8 years to 3.8 years of coverage based on need and affordability.
“These changes made policies more sustainable for insurance companies and more reliable for consumers.”
Long-Term Care Hybrid Plans
The industry has also grown to offer alternative options to traditional long-term care insurance. Hybrid policies link a Life or Annuity product with a long-term care rider. A one-time premium is paid upfront, and if you need care, you have access to long-term care benefits. If you never need care, your beneficiary will receive a death benefit.
While the one-time premium may not work for everybody, it’s a great option to protect yourself if you have concerns about whether you would ever use a policy.
While growing pains can be tough, there’s still a significant need for long-term care planning and financial assistance for families. Make sure you and your family are protected against the financial, physical, and emotional burden a long-term care event can cause. Get a free quote for long-term care coverage and learn more about your options by speaking with an LTC Consumer specialist.
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