Why Women Pay More for Long Term Care Insurance

In the past year, consumers have watched Long Term Care Insurance providers roll out new products with new pricing models that usually cause some questions. One of the main questions that arises when people see the changes to some of the latest policies is: why do women pay more for Long Term Care Insurance?

Gender Based Pricing

Most of the bigger Long Term Care Insurance providers have now implemented pricing models that include gender based pricing. In other words, women pay more for a policy than men do. This price structure is practically brand new and isn’t for no reason. While some women may cry foul and accuse insurance companies of being unfair, the reality is, it’s the old prices that were unfair, not the new.

The principle that sets the entire foundation of insurance is risk. Every component of insurance is based on risk, from the actuarial tables to the underwriting standards to the premium rates. Since the Long Term Care Insurance industry began in the 70s, companies have wised up as to who poses a higher risk than others and they adjusted accordingly.  Women, unfortunately, fall into that category and are now facing the consequences.

Women Are High Risk

The average lifespan for women in the United States is 81 years, compared to just 76 years for men. It is a fact of life that women live longer than men and it should come as no surprise to any one. It makes sense, then, that their chances of needing long term care in their senior years are much higher, too.

Not only do women have more years of life during which they can develop the need for assistance in life, they are also more likely to be widowed. If men need care, there is a good chance their wives will be around to provide it. By the time women need help, their husbands are often deceased and unable to provide the care the wife needs. The disparity explains why women make up 70% of all long term care claims. On top of that, they account for around 80% of all nursing home residents.

Looking at Policies

Insurance companies have gotten wind of these statistics and understand the gap in risk between men and women. Subsequently, they raised premium rates for women to take into account the higher chance of a claim. The higher rates don’t apply to married women, though, because spousal pricing usually applies. Single women, on the other hand, are the ones who are hit the hardest by this new pricing model. Because they have no partner to turn to should they need care, they pose the highest risk to Long Term Care Insurance companies. Therefore, they pay the highest base rates.

This kind of pricing is no less fair than auto insurance pricing that jacks up the rates for teen boys or life insurance pricing that increases the rates for men. Insurance is based on risk, so adjusting for risk is an inevitable part of a growing and learning insurance market. To learn more about Long Term Care Insurance and whether or not it is right for you, click here.

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