What’s Ahead For Long Term Care Insurance?

This is a much discussed topic. The need for long term care insurance is great – it is estimated that 12 million Americans are expected to need long term care by 2020 (source: Christine Benz, Morningstar, “40 Must Know Statistics About Long Term Care, 8/9/2012) and the cost can be significant. The long term care insurance industry has had a number of issues and there are only a few companies currently offering individual long term care insurance. Long time policy owners have seen premium increases – oftentimes dramatic increases, yet on the majority of older policies, the increased premiums are less than what a new policy costs. The question has come up about the future of the industry? The future of the industry has yet to be defined. It is clear that the insurance companies made a number of mis-calculations on pricing this coverage that have been impacted by the continued low-interest environment – in other words, the companies are paying out more in claims than planned and are making less money on their investments and yes, there are many other factors. In future newsletters, various aspects of the industry will be explored. In the meantime, a great article has been published by the Financial Planning Association (FPA): Long Term Care Insurance: Comparisons for Determining the Best Options for Clients by Christopher Finefrock, Suzanne Gradisher and Caleb Nitz) that provides a good overview of the different options in the marketplace.

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