The proportion of consumers who continue to pay their long-term care insurance premiums grew from 2008 to 2011 compared to 2002 to 2004, according to a LIMRA study released Wednesday.
During the more recent period, 3.6 percent of people let their policies lapse, compared to about 5.1 percent of people in the early 2000s.
The study examined 19 million customers across 20 companies. About 64 percent had bought their policies as individuals, and the rest had group coverage.
People are most likely to drop the policy during the first year, when lapse rates are over 10 percent. By the sixth year, lapse rates are 3 percent, and at year seven and beyond, the lapse rates are 1.5 percent.
According to a trade group for the long term care insurance industry, the average annual cost per couple for long-term care insurance purchased at age 55 in 2013 was $1,720. Premiums have been rising in recent years, because claims against the policies were more expensive than insurers had planned for.
Long-term care insurance policies with limited benefits — with a dollar cap, or a time limit — tend to be dropped more than those with unlimited benefits.
LIMRA is a Windsor-based insurance industry research group.
Author: Mara Lee
Source: Hartford Courant
Retrieved from: www.courant.com