Category Archives: Long Term Care

Level vs. relative premium increases and their effect on actuarial equivalence in long-term care insurance

The long-term care insurance industry continues to look for ways to manage disparities between premiums and costs. Premium increases and benefit reductions are likely to remain major factors in business decision-making. Insurers must carefully consider the impact of rate changes on their bottom line—not just in terms of raw numbers, but in how they relate to experience and the potential for future profits or losses across the spectrum of benefits. Milliman actuaries Mike Bergerson and John Hebig provide some perspective in this article.

This article was originally published in the April 2017 issue of Long-Term Care News.

How would a cure for Alzheimer’s disease change the LTC industry?

Alzheimer’s disease is the most common form of dementia and represents one of the largest long-term care (LTC) insurance risks. What though if Alzheimer’s disease were curable? How would it reshape the LTC industry? Milliman’s Jeff Anderson and Thrivent Financial’s Matt Winegar in their article “After Alzheimer’s: What happens to long-term care insurance after a cure?”

Long-term care first principles modeling: Advantages and enhancements in modeling

This article by Milliman actuaries is the fourth in a series on long-term care (LTC) first principles modeling. The first article in the series, released in March 2016, introduced the topic and set the stage for the series of case study discussions that would follow. The second and third articles in the series, released in June 2016 and November 2016, examined the development of mortality and lapse assumptions, respectively, for use in an LTC first principles model. The latest article builds on these discussions with a look into how a first principles model, using these assumptions, can enhance and simplify the modeling of LTC projections. Once the groundwork of developing the key assumptions is completed, first principles models provide an improved platform for modeling by automating many processes and making refinements both easier to implement and more varied.

Long-term care first principles modeling: Lapse assumptions

In this article, Milliman consultants discuss issues related to developing healthy life lapse rates using a long-term care (LTC) first principles model. As noted throughout the article, the common assumption that the ultimate total life lapse rate reaches a constant level produces an increasing healthy life lapse rate by duration. Alternatively, if the healthy life lapse rate remains constant once it reaches an ultimate level, that would imply that the total life lapse rate continues to decrease over time. The article also examines how mortality and lapse assumptions interact and the importance that developing an appropriate mortality assumption can have on setting lapse rate assumptions.

Long-term care insurance valuation: An industry survey of assumptions and methodologies

Milliman consultants Al Schmitz, Daniel Nitz, Tim Kempen have published a long-term care (LTC) insurance valuation survey. The survey reviews and documents the assumptions and methodologies related to the determination and testing of active life and disabled life reserves as well as the asset strategies and investments backing the reserves.

To download the research report, click here.

Developing mortality assumptions for LTC first principles modeling

The development of separate mortality assumptions for healthy and disabled lives creates challenges for insurers using a long-term care (LTC) first principles model. In this article, Milliman actuaries discuss those challenges as well as their experience working with companies to overcome them. They also explore the advantages and opportunities of an enhanced approach to modeling mortality in a first principles context.