LTCi Market Update
The long-term care marketplace has changed a lot over the last 10 years. Fewer carriers are selling traditional LTC insurance products, with most clients and advisors preferring hybrid protection today. Hybrids overcome the TOP TWO CONCERNS people have regarding traditional LTCi – guaranteed pricing and a return of premium if you die without using care.
Traditional carriers with a significant block of in force business and no longer soliciting LTCi are starting to experience reverse selection. When claims and prices increase, some healthy clients will find insurance elsewhere while others may return to self-funding their LTC costs. Genworth Financial continues to struggle with reverse selection [due to dramatic price increases] as they try to avoid a takeover by regulators, similar to what happened with Penn Treaty in 2017.
In 2021 we addressed Genworth’s status and provided insight into what happens if a carrier defaults. They are on the same trajectory as Penn Treaty; see their most recent vital signs report for current ratings and financials.
Hybrids – Today’s Preferred Plan
Hybrid coverage and life insurance policies with a rider for chronic care dominate the LTCi marketplace. John Hancock just released their NEW hybrid product. This is further evidence of the popularity and demand for these products.
A recent consumer study from One America discovered that 69% of 40–49-year-olds are more likely to purchase a hybrid long-term care policy over traditional LTCi.
WA Cares – Which state is next to impose a mandated LTCi program?
A few years back we expected other states to enact similar LTCi regulation as Washington did in 2023. State regulators have had their focus elsewhere dealing with more urgent matters. Below is an update on which states are looking to implement their own version of mandated LTCi for its residents.