A Report on the Actuarial, Marketing, and Legal Analyses of the CLASS Program. Product Differentiation

10/14/2011

The most distinguishing feature of the CLASS plan will be the benefit features. Most private insurance’s benefits are rule-based where limits and restrictions are specifically designated to control claim costs. Recognizing that each beneficiary’s needs are unique, CLASS benefits are beneficiary-driven. Beneficiaries can expect to have greater control on how benefit dollars are spent than in private plans.

A relatively novel feature is the increasing premium schedule. We believe it has a clear advantage over level premium plans because of its low entry price point. Compared with many group long-term care insurance programs where the option for benefit increases requires increasingly expensive premiums (commonly known as Guaranteed Purchase Option), the scheduled premiums in CLASS are known in advance and level in later ages. Thus CLASS offers more affordable inflation protection because there is no price pressure during retirement.

Lastly, unlike private insurance, CLASS plan’s benefits will vary by the level of disability.

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