Optimistic Outlook for Long Term Care Insurance Companies Shared

Larger long term care insurance companies should experience increased revenue when interest rates rise explained the director of the American Association for Long-Term Care Insurance.

Los Angeles, CA, July 31, 2013 --(PR.com)-- A rise of one percent in investment return on fixed interest instruments could generate an additional $100 million or more in annual revenue for insurance companies with blocks of long term care insurance.

"The long period of historically low interest rates sustained by the Federal Reserve has impacted long term care insurance companies," explained Jesse Slome, executive Director of the American Association for Long-Term Care Insurance. "No one has really thought about the outlook when interest rates rise again."

Slome was discussing the economic outlook with executives who market long term care insurance. "When interest rates rise, insurers will earn more which they will need to pay claims and also to meet profit objectives for their long term care insurance product lines. There is a real reason for optimism in our industry because we are already seeing interest rates rise."

"The impact is not immediate but will positively effect revenue over time," explains Claude Thau, a leading industry expert in Overland Park, Kansas. According to industry professionals, when the portfolio rate earned on a company's in-force business increases by one percent, a long-term care insurer with $10 billion in reserves will gain roughly $100 million of additional revenue annually. "This amount is prior to any federal corporate taxes that may be due on that additional income," Slome clarified.

According to the Association the two largest long term care insurers include Genworth Financial Inc., with over 1.1 million policyholders and some $9.96 billion in policy reserves. John Hancock, owned by Canada's Manulife Financial Corporation, has two companies with long term care insurance. The two entities insure over one million individuals and have roughly $8.0 billion in policy reserves. "There are many other large insurers who will benefit as rates rise again," Slome shared.

Established in 1998, the American Association for Long-Term Care Insurance advocates for the importance of long term care planning and supports insurance professionals who market the complete range of planning products. The Association makes available free consumer guides providing the most current information as well as tips to reduce the cost of long term care insurance.

To request a free, no-obligation long term care insurance costs comparison from a designated specialist who is a member of the Association, visit the organization's website or call 818-597-3227.
Contact
American Association for Long-Term Care Insurance
Jesse Slome
818-597-3205
www.aaltci.org
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