Women and long-term care insurance

Ladies, this is a good time to get serious about buying long-term care insurance. You'll soon have to pay more than your male counterparts.

Long-term care insurance pays for assistance with activities of daily living, such as bathing and dressing. Now Genworth Financial, one of the biggest players in the long-term care insurance industry, is raising premiums for women. The rate increases will begin rolling out in various states this spring, and could go as high as 40%. Experts predict other companies will follow suit.

Why? Economics. Women live longer, so they cost the insurance companies more. Genworth says two thirds of every dollar it pays out goes to women. Consider these statistics from The New York Times  (Feb. 6, 2013):

• On average, women outlive men by 5 years. Among those born in 1960, the average man will live to age 67 and the average woman to age 73. And women who reach age 65 can expect to live an average of 20 more years.  
• By age 75, 7 in 10 women are widowed, divorced or have never been married. Some 40 percent of them live alone, compared to 22 percent of men. Two-thirds of those past the age of 85 are women, as are 80% of centenarians.  
• Women who live to age 65 experience on average two years of disability requiring assistance before death. Those who reach age 80 will require three years of assistance.
• In nursing homes, the most expensive form of long-term care, 7 in 10 residents are women. They represent 76 percent of the residents in assisted living facilities and two-thirds of the recipients of home care.

The average premium in 2011 for a 55-year-old who qualified for preferred health discounts and bought between $165,000 and $200,000 of coverage was $1,720 (Source: American Association for Long-Term Care Insurance).  A 40% percent increase adds $688 in premium - and that's on top of the big price hikes we've already seen in the past years.

Genworth's new gender-based rates will apply only to women who buy new policies, not to women with existing policies or those who apply with their husbands. Companies generally provide discounts to couples who apply jointly for a policy.  

What should you do now? I advise that you look into purchasing long-term care insurance BEFORE the new rates roll out. In addition to the traditional long-term care policy, you may also want to look into alternatives like annuities and life insurance policies with long-term care riders, which allow you to pass to your beneficiaries any monies left over when you pass on. You may even be able to convert your current annuity or life insurance policy tax-free, and without any additional out-of-pocket expenses. You may contact our office if you need a referral to a financial professional who is familiar with these new products.