Don't Let Price Increases Scare You Away From Long-Term Care Coverage

In effect, the insurers are admitting they made pricing mistakes. The only other explanation for these price increases is that they priced policies artificially low to compete for business.

In a statement, David Acselrod, MetLife vice president, Long-Term Care & Critical Illness Insurance, said:

"Quite simply, we expect to pay out substantially more in claims than we originally anticipated. Some of the assumptions that drive LTCi pricing include policy lapses, interest rates, the number of people requiring care and the duration of care, to name a few. Following a review of our experience, we concluded that we had to make changes to ensure that we are pricing the products appropriately on behalf of all of our policyholders."

Isn't it the job of the insurance company to assess those trends that impact pricing before they go to market -- whether they be the rising cost of providing benefits or the cost of hedging against low interest rates that impact the investment of their reserves?

The Ultimate Cost

In 2007, according to the American Association for Long Term Care Insurance, 180,000 Americans received benefit payments as a result of having long term care insurance protection. Jesse Slome, the association's executive director says: "The total value of claims paid in 2007 was $3.5 billion - money that families didn't have to pay, and money that taxpayers didn't have to pay for impoverished seniors."

The population of Americans over age 65 is expected to more than double in the next 15 years. Few of the soon-to-be-elderly have saved enough to cover the costs of home health care, assisted living, or nursing-home care, which is currently approaching $100,000 per year in major cities.