Why are enrollees with the Automatic Compound Inflation Option (ACIO) whose age at purchase was 70 or older not receiving a rate increase, while other enrollees with ACIO are?
After an in-depth analysis of assumptions and actual results, we believe it is necessary to raise premiums to ensure that the FLTCIP can meet its future claims obligations. Some of the factors used in pricing have a greater impact as you project farther into the future; in particular the assumptions for enrollee persistency (the number of people who enroll and continue to remain insured) and return on Program investments. Enrollees whose age at purchase was 70 or older have a shorter time period between when their policy was issued and when claims are projected to start, on average. This resulted in a smaller impact from the changing assumptions and no need for a rate increase on the ACIO policies for these individuals. Younger enrollees have a longer time period between when their policy was issued and when most claims are projected to start. Therefore the changes in assumptions have a greater impact and resulted in the need for a rate increase on these ACIO policies.
Related Questions
- Why are enrollees with the Automatic Compound Inflation Option (ACIO) whose age at purchase was 70 or older not receiving a rate increase, while other enrollees with ACIO are?
- I am a current enrollee with the Automatic Compound Inflation Option. Would this be a good time to change to the Future Purchase Option and avoid this premium increase?
- Why is there no premium increase for Future Purchase Option (FPO) enrollees, when there is one for people with Automatic Compound Inflation Option (ACIO)?
