Although prolonged low interest rates are a primary reason insurers have exited the long term care (LTC) insurance market, these same low rates are a factor in increased LTC insurance sales.

From an insurer's point of view, low interest rates mean lower earnings on investments. "Low interest rates directly hit the insurer's financials, and the money available to pay shareholder or policyholder dividends," says Terry Truesdell, President and CEO of the National LTC Network. "Strict regulatory requirements mandate the premiums that insurers must set aside to pay future claims, but profits are optional. The bottom line for consumers is this: policyholders' interests and claimants interests are protected by regulators. LTC insurance policies are guaranteed renewable. No LTCI policy will ever be cancelled by an insurer because of changes in interest rates," states Truesdell.

Consumers Unsure About Self-Insuring Are Now Exploring LTC Insurance

"Low interest rates and volatile stock market returns have motivated some consumers to purchase long term care insurance policies. People who in the past thought they would be able to self-insure the risk of long term care are looking at their diminished account balances, and lower interest income and realizing that insurance looks very attractive," said Debra C. Newman, CLU, ChFC, CLTC founder of Newman Long Term Care, a national firm that is a member of The National LTC Network.

Distributors Staffing Up

"In addition to low interest rates, other factors such as a surge in interest from benefits brokers have lead to increased business for our firm. This quarter looks like it will be our best quarter ever. We've had to add 3 permanent staff members in addition to a temp position and intern position we added last year," said Newman.

Insurers and Maneuverability in and out of Markets

While low interest rates have caused some insurers to retreat, at least one major insurer has re-entered the market. Other insurers, studying the same low interest rates, have strategically recommitted to the product, likely thinking that, when interest rates inevitably rebound they will be poised for profits. "When it comes to insurance, it's easy to stop selling a product, but expensive and time-consuming for companies to bring a product to the public. That's because insurance is regulated at a state level, so for the national rollout of a product, 50 entities have to be petitioned. There's no spinning on a dime – if you want your policy to be available next year, you have to be out there applying for permission today," said Terry Truesdell.

For more information and quotes on long term care insurance, contact a Network member firm.



About Newman Long Term Care

Newman Long Term Care, a National LTC Network member firm, began focusing exclusively on Long Term Care Insurance in 1990.  Headquartered in Minnesota, they are one of the largest Long Term Care agencies in the United States, and are licensed to sell Long Term Care Insurance in all 50 states.

About The National LTC Network

Since 1994, The National LTC Network has been a leader in long term care insurance distribution. The Network counts among its member firms some of the most respected and successful firms in the industry. Members include trailblazers in workplace sales, association sales, and traditional individual sales.