There just hasn’t been a lot of good news about long-term care insurance lately. Private insurers have been dropping the product, and the Administration announced last fall that it was scrapping plans for a federally sponsored option.
The latest? The American Association for Long-Term Care Insurance says its yearly analysis of popular policies offered by 10 big insurers finds that prices for such policies have risen by as much as 17 percent from a year ago.
The average annual cost for a single 55-year-old in good health is $1,720, for $165,000 to $200,000 of current coverage, the association says. Last year, the same coverage would have cost $1,480.
The analysis priced policies that included a 3 percent compound inflation growth factor, because consumers need to be sure the benefits they buy today keep pace with rising costs, said Jesse Slome, the association’s executive director.
Mr. Slome attributed the premium increases to continued low interest rates and middling yields on fixed-income investments, which make it difficult for insurers to earn enough from investing the premiums they collect to pay future claims. “It’s the cumulative impact — and looking ahead,” he said, noting that the Federal Reserve has indicated that interest rates will not rise much through 2014.
Mr. Slome said that insurance companies were pricing their products correctly. “The problem is, it’s an expensive product,” he said.
The cost of the premiums offered by different companies for comparable coverage varied widely, though, so comparison shopping is important, Mr. Slome said.
Roughly eight million people carry some kind of long-term care coverage, according to the association’s data.