Why women have to pay more for long-term care insuranceInsurance companies are moving away from unisex pricing because women tend to live longer than men and require more care. Women accounted for 65 percent of all new long-term care insurance claims opened in 2011, according to the association's 2012 industry report. The most frequent reasons women need long-term care insurance benefits are dementia, cancer, fractures, stroke, osteoarthritis and hip fractures or replacements.
Health insurance doesn't cover long-term care, which includes assistance with daily living activities, such as eating, transferring in and out of bed and toileting. Slome says single, divorced or widowed women are especially at risk for needing long-term care because they lack the built-in support network of a spouse to help out.The chance of needing long-term care sometime after age 65 is about 70 percent, according to the National Clearinghouse for Long Term Care Information. Last year insurers paid out $6.6 billion in long-term care insurance claims, the association says. Slome says the best time to purchase long-term care insurance is between ages 55 and 65. By waiting too long, you risk developing health problems that make it difficult to qualify. Today a 55-year-old woman can buy $170,000 of immediate long-term care insurance benefits for an average of about $150 a month. The benefits would grow to over $350,000 when she reaches age 80, Slome says. A 65-year-old would pay $250 a month for similar immediate coverage. Rates and policies vary widely among insurers, so comparing prices and coverage is critical. Slome advises working with a good adviser who sells products from at least four to five different companies.
Why are rates for women's long-term care insurance going up now?The fact that women file the majority of long-term care insurance claims shouldn't be too surprising, given that women on average live longer than men. But insurers have to base rates on data, not assumptions. Typically it takes about a decade or longer after policies are sold for claims to start rolling in, and then more time to determine how much those claims cost overall. "It's probably 15 to 20 years [after policies are sold] before you can really look back at the data," Slome says. "This is not like health insurance where you can do a rolling snapshot year to year."
While rates will rise for women, Slome doesn't expect a comparable rate cut for men."Rates are probably not going to go down because interest rates are not going up," he says. Insurance companies invest premiums and use the returns to help pay claims. With today's historically low interest rates, insurers have a tough time getting the returns they need to make money or even break even. Some insurers have left the market altogether in the last few years, while others have suspended sales of the most generous benefits, made it harder to qualify for coverage or jacked up premiums on existing policies. (See: " Leaner and meaner: 7 long-term care insurance changes you need to know.")