Storm clouds are on
the horizon for Long-Term Care Insurance.
This year Guardian, Prudential and MetLife left the market. Unum eliminated their Small Group LTCi
program. John Hancock came back into
California, however, at a greatly increased premium.
Much of the turmoil is due
to the Federal Reserve keeping low yields on the bonds portfolio’s making it difficult
to maintain reserves sufficient to cover liabilities that increase by 5% annually.
This compounded by the fact that insured’s
do not voluntarily lapsed their coverage at the previously anticipated 6% rate. Most carriers are seeing less than a 1.5%
lapse rate. (You buy LTCi - You keep LTCi)
Genworth, the largest
underwriter of LTCi, is not immune to the fiscal crisis. They have cut agent’s commissions by 15%, are
eliminating unlimited benefits and limited pay options. In some states Genworth has reduced couples
discount from 40 to 20% and eliminated preferred rating discounts.
Now there is talk of charging separate rates for men and for women who
buy individual LTCi coverage instead of charging one blended unisex rate. This will mean higher prices for women. Why? Women tend to live longer, spend more time receiving
long-term care services, and, if they are married, tend to be more likely than
men to end up needing formal LTC services, not being able to depend on a spouse
to provide the care.
LTCi will survive. For now, baton
down the hatches, set your sea anchor or find a safe harbor and prepare to ride
out the storm.
Conclusion:
Don't wait for the policies to get better or less
expensive, or for others to provide for you. If it is
affordable buy it. You'll never be younger and probably
not healthier than you are today. 
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