ASOP 18 - LTCI

Question 1

LTCI pricing assumptions (8)

Answer 1

1. Morbdidity
2. Mortality
3. Lapse
4. Expenses
5. Taxes
6. Investment return
7. Mix of business
8. Change over time

Question 2

Considerations in setting LTC claim cost assumptions (9)

Answer 2

1. Claim cost will vary by nursing home, assisted living facility, and home health care
2. Substitution effect among various benefits
3. Increased demand for LTC services due to presence of insurance
4. Availability of benefits from other programs (Medicare)
5. Availability of LTC services in geographic area
6. Effect of UW selection and UW classes
7. Financial benefits to the claimant of remaining elig for benefits
8. Effect of mortality on termination rates
9. Effect of marketing and claims processes

Question 3

Considerations in setting lapse assumptions (6)

Answer 3

1. ) Method of marketing
2. ) Policyholders expected to be covered
3. ) Competitiveness
4. ) Premium mode and payment method
5. ) Nonforfeiture benefit
6. ) Customer service of entity providing benefits

Question 4

Besides stand alone LTC plan, LTC benefits can also arise from (4)

Answer 4

1. ) Acceleration of benefits under life insurance contracts
2. ) Other insurance products with LTC benefits or riders
   3) Managed care programs
3. ) Retirement communities