What is the financial expectation for payout in individual LTC policies based on the loss ratio?

The expected payout in individual Long-Term Care (LTC) policies is based on the loss ratio, which represents the proportion of premiums that an insurer will pay out in claims. A loss ratio of at least 60% indicates that for every dollar collected in premiums, at least 60 cents must be paid out in claims. This expectation is important because it ensures that policyholders receive a reasonable benefit from their premiums while allowing the insurance company to manage its financial stability.

A loss ratio below this threshold could indicate that the company is not fulfilling its obligations to policyholders adequately. Although higher loss ratios are generally more favorable for consumers, the threshold of 60% strikes a balance between ensuring sufficient claims payment while allowing the insurer to cover administrative costs and maintain profitability. This is why the answer indicating at least 60% on claims payments aligns with industry expectations for individual LTC insurance policies.