Friday, August 2, 2013

The Death of Long Term Care Insurance?

This is from Henry Stern writing at InsureBlog:

Genworth, one of the last remaining "players" in the Long Term Care insurance (LTCi) market, is about to drop the hammer on some of its long-time policyholders:


Actually, this is far from unexpected, and arguably overdue: as we've seen over the years, the current long term pricing models just aren't sustainable. For one thing, too many folks have kept their policies (not a bad thing, per se, just that carriers count on a certain amount of attrition), so both claims and reserves continue to mount.

And, of course, as the LTCi business itself matures, it becomes more and more obvious that earlier plans were substantially under-priced. While that may have been a good deal for early adopters, over time it's a problem.

Which is not to say that the LTCi market is 'kaput;' indeed, more folks than ever seem to be taking a serious look at these plans. But it's important to keep in mind that, with few exceptions, rates will continue to climb for at least a while.