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Gender Based Pricing and Long Term Care Insurance
The cost of life insurance and health insurance is always determined by gender. Traditionally, life insurance for women has been cheaper than for men due to longer life expectancy. For life insurance, it is cut and dry and the statistics prove the rationale for the pricing strategy. 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.
Unlike life insurance, LTC is still relatively immature. Time will tell whether the actuarial data supporting gender-based premiums is justified. I believe traditional LTC is still working on pricing and other aspects to find a solution, once and for all, to the financial impact of chronic medical conditions. Policy design, benefits and premium structure have all changed over the years and I expect that to continue.
The Post article suggests further changes regarding the effects of applicant gender and premiums for long-term care. It is commonly known in the industry that women experience greater financial costs associated with caregiving than men. Insurance companies are now testing this by moving to gender-based pricing. Another line of debate in the insurance industry is whether the new gender-based pricing is rooted in the Affordable Care Act (aka Obamacare.) The new rule prohibits health insurance providers from charging based on gender. So, are insurance companies testing the market for lost revenue due to new government policies?
Regardless, long-term care is still a viable solution for many consumers’ needs. However, other solutions are also available such as linked benefit plans, where women can get a lower cost when the linked benefit plan uses a life insurance chassis. So, for some agents, the added benefits may offer a better client solution than traditional long-term care.
Regardless of your client’s gender, traditional LTC and linked benefit plans should be evaluated and considered when seeking long-term care policy solutions for clients. We like this policy for a variety of reasons and, if you’re considering LTC or life insurance options for consumers, we encourage you to evaluate options like linked benefits or adding a long-term care rider. You may find that the upside offered by a linked benefit policy helps secure your next deal.
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