Gender Based Pricing – A New Evolution in Long Term Care Insurance

Gender Based Pricing – A New Evolution in Long Term Care Insurance  

Talk to any Long Term Care specialist these days and they’ll acknowledge that this is one crazy market.  As a broker, your day consists of selling worksite coverage and you’ve done your best to keep up with all products including Long Term Care.  Let’s say you get a call from your client, and their COO has just been through a Long Term Care event with their parent.  The HR department is now in charge of finding a Long Term Care insurance product as a benefit for the employees.  You feel pretty confident in helping.  You know what carriers have exited the “true group” LTC market, you know what carriers will still take new hires on policies already written, and you’ve gotten through explaining the huge LTC price increase to your first client that was impacted (and to your surprise they didn’t drop the policy)!  However, a recent industry trade article has thrown you for a loop – gender based pricing.  Is this the new evolution in Long Term Care?  Does this apply to employer sponsored programs?

The short answer is yes, this is the new evolution to Long Term Care policies, and, no, it does not apply to employer programs.  Carriers are now looking to have females pay higher rates than their male counterparts in the individual market but not in the Multi-Life long term care market.  Some background, Genworth has already started selling its individual Privileged Choice Flex 2 with gender based pricing and other carriers are expected to follow suit.  So while we’re wrapping our heads around that one let me propose an alternative.  Sell Multi-Life LTC in the workplace and not individual.  There are significant advantages here to the women in the organization and to the men, well, their pricing isn’t impacted.

The regulation of insurance is typically a matter of state law. And a state may have more power than Congress to mandate the behavior of its citizens.  But the Supreme Court itself has been rather aggressive about the terms of insurance. In Arizona Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, the Supreme Court ruled that under the Fourteenth Amendment, state agencies are prohibited from using gender-based pricing in connection with employee benefit plans even though the effect is to require women to pay higher rates for life insurance (because men are in the pool) and men to pay the higher rates for annuities (because women are in the pool).* 

We all know the landscape can change quickly in the insurance world, but for now the above ruling from all the way back in 1983 has kept carriers from using gender based rates for employee benefit programs.  It may change one day, but that will require a carrier to take the first shot over the bow and so far they haven’t wanted to fire that shot.  So for now, if you are selling an individual LTC product in a worksite environment you might just be adding to your challenges.  Multi-Life LTC still has significant advantages to take a look at and should that COO direct their HR department to research options on Long Term Care, this product should definitely be in the mix.