Jumat, 19 Juli 2013

Gender Based Pricing and Long Term Care Insurance

Life insurance and health insurance have always been priced according to gender. Traditionally, life insurance for women has been cheaper than men because of longer life expectancy. For life insurance, it is cut and dry and the statistics prove out the rationale for the pricing policy. Recently, as discussed in an article in the Washington Post earlier this year, Genworth announced a switch to gender based pricing for long term care insurance as well.

Unlike life insurance, LTC is still relatively immature. Time will tell if the actuarial data supporting sex based premiums is justified. I believe that traditional LTC is still working on pricing and other aspects to, once and for all, find a solution to the financial impact of a long term medical situation. Policy design, benefits and premium structure have all seen changes in the last few years and I expect this to continue.

The Post article alludes to more changes regarding the impact of the sex of the applicant and the premiums for long term care. It is commonly known within the industry that women will experience a greater financial costs associated with care than men. The insurance companies are now going to put this to the test by going to gender based pricing. Another line of discussion within the insurance industry is whether new gender based pricing is rooted in the Affordable Care Act (aka Obamacare.) The new regulation prohibits health insurance providers from charging based on gender. So, are insurance companies testing the market to account for lost revenue resulting from new government policies?

Regardless, long term care is still a viable solution to the needs of many clients. However, there are also other solutions available, like linked benefit plans, where women can get lower pricing when the linked benefit plan is using a life insurance chassis. So, for some agents, linked benefits may provide a better client solution over traditional long term care.

Regardless of sex of your client, traditional LTC and linked benefit plans should be evaluated and considered when seeking a long term care policy solution for clients. We like these policies for a variety of reasons and, if you are considering LTC or life insurance options for clients, we encourage you evaluate options like linked benefits or the addition of a long term care rider. You might find that the upside offered by a linked benefit policy helps secure your next deal.

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