What is the expected group loss ratio percentage for long-term care insurance?

The expected group loss ratio percentage for long-term care insurance is around 75%. This figure is significant because it represents the percentage of premium dollars that an insurer expects to pay out in claims over a specified period. A loss ratio of 75% indicates that for every dollar collected in premiums, 75 cents will be expected to cover policyholders' benefits, with the remaining 25 cents allocated for administrative costs, profits, and reserves.

This ratio is crucial in evaluating the financial health and sustainability of long-term care insurance products. Insurers aim to maintain a balance in their loss ratios to ensure they can meet future claims while remaining profitable. A higher loss ratio may indicate that policies are more favorable for policyholders, but if it exceeds expected limits, it could lead to financial difficulties for the insurer, potentially resulting in increased premiums or product changes in the future.

Understanding this benchmark of 75% can help agents explain the dynamics of long-term care insurance to clients, positioning the product as a stable option while highlighting the need for responsible underwriting and pricing strategies by insurers.