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How Long-Term Care Insurance Is Changing

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Long-term care insurance is a type of insurance policy that protects healthy seniors from the future costs of long-term care. Although these policies are common today, they have only been widely available since the 1980’s. However, long-term care insurance is once again becoming scarce–not to mention increasingly expensive.

Why Insurance Providers Are Increasing the Price of Coverage

Since the 1980’s, insurance providers have seen a few trends regarding long-term care insurance. The first is that a large number of customers keep their policies long enough to file a claim. In addition to frequent and expensive claims, low interest rates have cut into providers’ profits on policies that increase in value a few percentage points each year.

Long-term care insurance has become so risky that many providers have stopped offering these policies. Others have either reduced coverage or significantly increased their premiums. In fact, CalPERS, California’s public pension fund, has increased their rates 85% in the past two years with government approval.

To further reduce risks, many companies are becoming more selective when it comes to accepting customers and calculating rates. Single women, for example, are frequently being charged more for policies. While this might help providers continue offering coverage, it will make it more difficult for certain seniors to get an important insurance policy that might protect them from financial troubles in the future.

Is Long-Term Care Insurance Still a Safe Bet?

According to statistics compiled by the Henry J. Kaiser Foundation, two out of three seniors suffer some degree of physical or cognitive impairment later in life. For one out of every three seniors, this impairment will require long-term nursing home care. Unfortunately, long-term healthcare is not only common; it is also expensive. In 2009, the Department of Health and Human Services found that seniors paid an average of $21 an hour for the help of a home medical aide. Seniors who had their own room in a nursing home paid an average of $219 a day, while a one-bedroom apartment in an assisted-living facility averaged $3,131 a month. As with any type of insurance, long-term care insurance is a gamble and rising prices don’t necessarily help. Still, when considering the cost of care, it is certainly an option that is still worth considering.


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