“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.”
LTC Comment (from Stephen A. Moses, President, Center for Long-Term Care Reform):
Progress? Good for people who don’t lapse, but the fewer lapses, the harder for carriers to constrain premiums. It’s a dilemma public programs, that can lower interest rates and print more money when they run short, don’t face … until they do! Defying economic gravity is as dangerous as ignoring Mother Nature.