Question confined to Long Term Healthcare policies that provide a fixed daily benefit (unrelated to cost of care) over a fixed number of months.
In trying to explain why a premium increase (of 50%) is needed Genworth says two things that prompt my questions:
1) that premium "set-asides" earn interest, similar to a savings account and 2) that more people who have purchased policies are keeping them (that is, are not dropping their coverage)
Relative to the first, I assume that insurers are investing in something other than a "savings account"; so what kind of investments might an insurance company make and how can a policyholder be certain that the insurer is investing wisely?
As to the second assertion, that suggests that an assumption is made (at the origin of the policy) that a certain % of policy holders will drop their policy before collecting any benefits. What is the magnitude (% of policy holders who will pay premiums and then subsequently drop the policy before getting benefits)?
(note that the citation says "industry experience has shown that many more people are keeping their policies than originally anticipated" - it does not say that many people are dying before collecting benefits.)
BTW, it is reasonable to anticipate that some policy holders will elect to drop their policy because they can no longer afford the increased premiums, so by increasing the premium the number of policies dropped can increase to some level that "the industry" considers "originally anticipated".