This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Leaner And Meaner: 7 Long-term Care Insurance Changes You Need To Know





As the U.S. population ages, the long-term care insurance industry is suffering growing pains.

Some insurers have called it quits. Others are suspending sales of the most generous benefits and tightening up underwriting. And many are increasing premiums on existing policies.

Buyers now pay more for less coverage and face tougher health requirements to qualify for the best rates. (See: " Tips for buying long-term care insurance amid rising rates.")

The changes come as insurers grapple with big losses on older policies.

"Many insurance companies priced those policies based on erroneous assumptions," says Christopher Kimball, a certified financial planner in Lakewood, Wash.

Policyholders filed claims at earlier ages and lived longer than expected. Meanwhile, an unusually small percentage of customers let their policies lapse, which meant more customers eventually filed claims than insurers projected. (See: " Health and life insurance tips for the sandwich generation.")

Those factors, combined with historically low interest rates, created a perfect storm to challenge the industry. Insurers invest premiums and use the returns to help pay for benefits. Low interest rates make it tough for insurance companies to get the returns they need to make money or break even.

Here are seven consequences of the industry's evolution and how the changes affect you:

1. Fewer insurance companies offering coverage

"In the early 1990s over 100 companies were selling long-term care insurance," says Murray Gordon, founder and CEO of MAGA Ltd., a long-term care insurance agency in the Chicago area. "Now we have six or eight companies with good ratings."

Allianz Life left in 2009, and MetLife pulled out in 2010. This year Prudential Financial Inc. quit selling individual long-term care policies, and Unum Group exited the group market.

Remaining players, including Genworth, TransAmerica, John Hancock, Mutual of Omaha and Massachusetts Mutual Insurance Co. (MassMutual), are redesigning products.

1 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Submit an article to us!
SYM TRADE IT LAST %CHG

Markets

DOW 18,024.06 +183.54 1.03%
S&P 500 2,108.29 +22.78 1.09%
NASDAQ 5,005.3910 +63.9670 1.29%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs