LAKEVILLE, CT — It’s been a semi tumultuous year (yet another) in our industry. In 2021 long term care insurance claims paid, in aggregate, exceeded 12 billion dollars, which is an 11% increase over 2020. In terms of traditional insurance, Mutual of Omaha (MoO) and National Guardian Life (NGL) seek to benefit from the reduced pool of insurance companies willing to play. NGL has increased premiums , for NEW participants, by over 25% and their sweet spot remains insuring couples. They are a very difficult company from an underwriting perspective, as 35% of applicants are declined. Their huge competitive premium advantage for couples will keep them in the forefront.

In our particular business, where we seem to concentrate on professor and doctor types, HYBRID products dominate. On a discounted present value basis (temporary cash flow aside) hybrids are often less expensive than traditional products, with the added benefits of guaranteed premiums, and a return of those premiums to beneficiaries if care is never needed. The title of “best” hybrid product is still predicated on variables such a single pay or ten pay, and the age of the individuals applying. Which is why, in our business, it is so important to do due diligence before a product recommendation. Many hybrid products pay cash benefits, with no restrictions. This seems to resonate with our clients, many of whom see their homes (first floor) as their future long term care facilities. Cash benefits enable friends, family members, and live- ins to be compensated for services. This is simply not possible with current traditional products.

For 2022 we continue to see a tightening of underwriting standards. Covid has been responsible for a significant mortality hike, which has, or will, impact all life insurance companies. The interest rate environment remains murky, though with a sense of near certainty interest rates will be rising, which will lift all insurance companies, who invest premiums to match future liabilities. This also bodes well for stabilized premiums in traditional markets.. We may also see new entrants to traditional and employer markets with re structured traditional products. That said, currently sales of hybrid products are meaningfully higher than traditional products. Hybrid’s will continue to dominate in the foreseeable future.

We are interested in your comments, and if you have questions, or would like to discuss, e-mail us at helpme@retirementguard.com