Another Long-Term Care Insurance Company Leaves the Market
Last month, Prudential Group Insurance Company, the nation's second largest insurance company, announced that it would no longer offer individual long-term care insurance policies for sale.
The company said that although it would discontinue individual sales, it would be focusing "solely" on group sales of long-term care insurance, and hastened to add that it would continue to honor all existing individual long-term care insurance policies.
"The demographics of the employer market align well with our strategy of providing voluntary benefit solutions to individuals through our group marketing and distribution platforms,” said Malcolm Cheung, vice president, Long Term Care, Prudential Group Insurance. "The decision to exit the individual long term care business reflects the challenging economics of the individual market and our desire to focus our resources and capital on the group market where we see the greatest opportunity.”
Here is another way of saying the same thing: "After 25 years, we can't make a profit selling policies one at a time, so we are getting out."
According to a story earlier this week in USA Today, in the past five years 10 of the top 20 long-term care insurance companies have exited the market for individual policies, including MetLife and Unum.
Some companies that have remained in the market have sought permission from state insurance commissioners to raise premiums.
"I'm 63 years old and ready to retire," a client of the Elder Law Practice wrote to us a couple of weeks ago. "My long-term care insurance company has informed me that my long-term care insurance premium will be going up almost 50 percent. What should I do? I don't have a spouse or children that I can rely on to take care of me, and I really need to keep my policy.
"After having the policy for 14 years, I am afraid I won't be able to afford to keep it, especially after I retire."
Although the company offered him options to reduce his premium, those options included reducing his benefit from lifetime to five years and capping his inflation protection from 5 percent to 3.5 percent.
Our suggestion to him: consult your long-term care insurance specialist to consider other options (such as a hybrid policy that combines long-term care benefits with a life insurance or annuity). Our client has had a gold-standard long-term care policy during his working years, when he is most able to afford it. Now that he is that much closer to needing the policy, he is put in a position of being unable to keep it.