As most people already know, life insurance has always been less expensive for females because they generally outlive men by 5 to 15 years. This allows insurance companies more years to collect premiums before paying out a death benefit, hence the lower premiums.
Long-term care insurance
, having been around since only 1968, hasn't had hundreds of years of claims experience to base premiums, as life insurance has. However, after 45+ years' experience of paying claims, the insurance companies have experienced claims data reflecting that 67 percent of all claims are for women. Also, the duration for claims is much longer for women than men. In addition to that, only 20 percent of all life insurance policies result in an actual death benefit being paid out.
The majority of people buy life insurance in their early years to protect their wives and children from the devastation of losing the financial primary provider, which in most cases used to be the husband, but today, is often the wife and mother as well. They then, after the nest is empty, lapse or reduce their term life policies and cash out or convert their permanent policies to other insurance vehicles, such as annuities
, that better suit their needs in their golden years.
The lapse or cancellation rate of long-term care insurance is generally less then 1 percent. People keep their coverage, and if they live long enough, use it at a higher percentage than all other insurance coverages combined. These statistics have caused many carriers to raise rates substantially on older blocks of business which, after many years of claims experience, resulted in a much higher rate of claims than original premiums collected could sustain.
It has now become apparent to insurance companies that they must have gender-based premiums that reflect a woman's greater use of their long-term care insurance over a man. One of the pioneer long-term care insurance carriers has introduced coverage that reflects higher premiums for female applicants
. As always, the other carriers will follow suit.
This presents a unique opportunity for females to apply for coverage at this time before these increases are implemented with all companies. Also, for couples of the opposite gender, this presents opportunity as well. Especially if they design coverage with the "shared" option, which makes both individual policies into one policy covering both partners — a long-term fire sale, so to speak.
So, if your clients have procrastinated getting long-term care insurance, now is the time to urge them to do so.