RIP LTCI: “It was a good start”

By Paul Wilson


We’re all aware of the challenges currently facing the long-term care insurance industry: pricing and claims issues; rate hikes; unmotivated consumers; the exit of key carriers. There’s no doubt the industry is struggling, but is it time to call the undertaker?

A new article on McKnight’s by John O’Connor makes the case that LTCI could be on its last legs — and that it’s possible demise may not be such a bad thing.

O’Connor explains that the most serious issues with the product are economic in nature, as many carriers are being forced to flee the market due to their failure to predict the sharp rise in the cost of providing care. Meanwhile, those who choose to stick around are requesting premium increases of as much as 90 percent.

But while pointing out the issues with the industry, he also argues that private LTCI “will likely be a catalyst for more successful insurance options.” He goes on to list several possible “progeny” who might emerge from LTCI’s ashes. Among the leading candidates to replace it are hybrid policies that combine LTCI with annuities or life insurance and longevity insurance, O’Connor says.

“Various other insurance themes are also emerging,” he adds, “and this trend will almost certainly continue.”

He ends the piece with the following quote: “If private long-term care insurance will have an epitaph, it will likely be something like this: It was a good start.”

Do you agree that although LTCI “seemed like a good idea at the time,” it’s a failed project that will eventually be replaced by more successful alternatives?

Are you ready to declare long-term care insurance DOA?