Is Long-Term Care Uninsurable?

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Options for funding future care are dwindling for the millions of baby boomers who will need pricey long-term services as they age.

Since 2004, the number of long-term care insurance policies dispensed in the United States has decreased by 38 percent, according to a recent industry analysis conducted by Moody’s Investors Service.

A product still considered to be in its infancy when compared with other types of indemnity plans, long-term care insurance has been hailed as a boon for middle-aged adults trying to financially prepare for an uncertain future.

Now however, it appears as though the future of the traditional long-term care policy may be just as unsure.

In the past two years alone, a host of industry titans, including: Met Life John Hancock, Prudential, UNUM and CNO Financial Group, have either ceased issuing long-term policies, or have slashed their offerings.

The main reason these major firms are backing out?

In a word: money.

Unlike other traditional insurance products (car, home, etc.), many people who purchase long-term care insurance actually use all of their benefits.

In a press release, Laura Bazer, author of the Moody’s report, says the newness and complicated product structure of long-term care policies make coming up with profitable pricing methods tricky for most insurance companies.

Mispricing can deliver a debilitating monetary blow to a provider—one that they may try to mitigate by hiking rates and decreasing benefits for current and future policy holders.

It appears to be a lose-lose situation for all involved as increasing premiums can put plans financially out of reach for many adults.

The future of long-term care insurance remains shaky. In an effort to balance profitability with affordability, some companies are starting to offer different options, including: ‘shared care’ policies that allow spouses to combine long-term care benefits, and hybrid policies that combine life insurance and long-term care benefits.

Source: agingcare.com

Contact Pure Home Care Services at (586) 293-2457 today! If you live in Macomb County or the surrounding area, we can help you care for your loved ones.

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