So reported CNBC here last week:
Three major plan providers, Metlife, Prudential and Unum, have stopped selling individual policies within the last three years.
"Companies have had a very difficult time hitting profit objectives," said Marc Cohen, chief research and development officer at insurer LifePlans. "Many of the assumptions underlying the pricing of these policies didn't hold true."
Among the assumptions firms made when they began selling plans in the 1990s was that policyholders would let their coverage lapse at about the same rate they do life insurance products. The lapse rate for long-term care has proven to be much lower. Policyholders who buy coverage during their senior years tend to hold onto their coverage and collect on their claims.
"The largest claim that's still open is from a woman," said Slome. "She's been on claim for 15 years. Her insurance policy has paid out one point $8 million to date and it continues to pay. She only paid $881 for three years before her claim began."
The industry has responded to that kind of bad underwriting by tightening qualifications for the coverage, setting caps on benefits and raising prices.
With 76 million baby boomers reaching retirement age over the next decade, the need for long-term care services is expected to surge.
