In today's online Wall Street Journal, in the Weekend Investor section, it shows an article titled "Is This the End of Long-Term-Care Insurance? ", but if you click through (or read it in the print version), the title is "Long-Term Care: What Now?".http://online.wsj.com/article/SB10001424052970203961204577269842991276650.html
Although it tiptoes around the title's actual topic, it's an interesting read. One fact I didn't know: 10 of the top 20 insurers by sales selling to individuals have left the market in the last five years, according to Limra International, a research firm. The article mentions the recent departures by Prudential Financial, MetLife, and Unum Group. What happens to the people who bought policies and have years more to pay? Does this only apply to new policies? How is this market sustainable?
"Prudential Vice President Malcolm Cheung says the company decided to stop selling long-term-care coverage to individuals because of the uncertainty surrounding future claims and persistently low interest rates."
I've been an undecided fence-sitter regarding long term care insurance, and every new thread raises my anxiety all over again. I'm 62 and my wife is 61, and we're in excellent health, but I know that can change quickly, so we're running out of time to make a decision. But if the long-term care insurance market can't be counted on, there might be no decision to make before long.
It seems to me that the low interest rates are only the insult to injury: any insurance company that understood demographics (ever hear of the Baby Boomers?), that had been following the healthcare cost inflation, and could see the scary patterns of increasing health risks among Americans (let's all super-size, young and old!) shouldn't have missed this logical outcome. They'd have to be able to get returns that are two to three times the rate of overall inflation in order to have a prayer of paying the benefits. Or maybe they knew that, made their money while they could, and figured they'd get out when it no longer made sense.
I don't see how this market could work (except for the very wealthy) unless the risks were fully pooled across all individuals, which, of course, isn't likely to happen.
I wish I could feel better about the options, but I feel like I was born 10-15 years too late for this product to make sense, though I'd love to be able to believe otherwise.