Aspirin, Not Morphine: Inflation Risk, Interest Rate Movements and Long-Term Care Capitalization

In Brief

Interest rate movements (or lack thereof) can present problems for insurers that underwrite and sell long-term care insurance (LTCI), but only under particular circumstances.

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To understand these effects, it is essential to grasp how LTCI can be affected by inflation, how inflation relates to interest rates, and, finally, how insurers invest their LTCI assets. In this article, Bruce Stahl, ASA, MAAA, explores this issue.

Aspirin, Not Morphine: Inflation Risk, Interest Rate Movements and Long-Term Care Capitalization

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