Is Your Long-Term Care Policy Safe?

Conseco's financial plight is not the fault of the policyholders who signed up in good faith and started paying premiums from day one

I am working with a gentleman who bought LTC insurance from Conseco in 1997 for he and his wife. She entered the nursing home about three years later. Because of the 90 day waiting period, she died right before that time and never received any benefit. Now the person I am working with, who also bought the alternate care policy, has not been approved after almost a year of trying to receive benefits. This is a 95 year old man who has let this process of being denied benefits for almost a year affect his health. He was hoping to have the money to move from his home to a place where he could receive needed caregiving. He has already paid over $70,000 in premiums and is still paying premiums. I hope he lives to see some return on his investment. If he doesn't, I hope the committee who approves or disapproves the request for benefits can feel in their minds that they acted in good faith to this person. I don't believe if it were me, I could.

Terri NIcoll of OK @ Jan 23, 2009 08:11:52 AM

Long Term Care Insurance

Dear Phillip,

This time I will defend the Department of Insurance. In fact, I am a policy holder with Conseco. I received a letter from C. Everett Koop; a trustee stating what is ocurring.

What is the difference if the trust pays my claim or the insurer. There is over $3 billion in reserve to pay future claims. Healthy risks will NOT cancel their coverage if they are smart. That is because if they shop they will not be able to find lower rates anywhere. I pay less than $200 per quarter for my $150,000 of benefits. I am 56 and healthy. Please, someone make me an offer that has a lower premium. I have been paying discounted premiums for years. Who would complain.

The NY Times reporter who said benefits will be reduced is dead wrong and could be sued for yelling fire in a theatre. Benefits can not be reduced without the approval of the policy owner. Rates can increase and if they do they would have to triple to match what other insurers are charging.

What is the alternative to purchase private insurance? The government?

A much bigger problem is the unfunded liabilities in government programs such as Medicare, Medicaid and Social Security which are over $100 trillion. If the government itself were an insurer it would have been shut down for making promises it obviously can’t keep. If you think premiums for LTCi are high, wait until the next generation starts paying twice (government numbers) the rates for taxes. I tell parents having kids today that they are 70% babies. That will be their tax rates. LTCi is a bargain and will continue to be so for those who are smart enough to purchase and hold on to it.

Ross Schriftman, RHU, LUTCF, ACBC, MSAA of PA @ Jan 04, 2009 11:00:09 AM

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of,

are you suggesting that if your home was paid for you would not insure it?

from what I've read, the LTCi industry pays over $3 billion per year in claims. and the average LTCi policy only costs about $1,200 per year for a healthy person in their 50's. It would take only a very short claim to recoup those premiums, even when adding the opportunity cost (especially in light of today's equity market.)

Ed of OH @ Dec 10, 2008 13:37:18 PM

Barry, the LTC underwriting "mistakes" you mention were when the insurance might have been worth having. Now it is priced such that most people will lose money on it.

And there is no parallel to homeowners and auto insurance that people are forced to have by mortgages and financial responsibility laws.

Want an LTC plan that makes sense? Force it like Medicare.

of @ Dec 09, 2008 10:39:06 AM

LTC Insurance

Those who rail against the coverage or suggest the protection is a rip off have not researched the more than $1 billion in claims dollars paid out. It is true there were errors among some of the early marketers of this insurance who did not understand the actuarial parameters that need to be adhered to. However, this coverage is a matter of mistakes. Having paid the premiums and not using the coverage could be a small mistake. Not having the coverage and having a costly long term care situation would be a big mistake! By the way how much homeowners or auto insurance has anyone received back?

Barry of AZ @ Dec 08, 2008 23:28:15 PM

My experience with my mother's "return of premium" rider is that it was a costly sham.

She would have had to live and pay into the policy to age 93 with no claims in order to get the premium back.

In today's financial environment, it's my opinion that MOST of the LTC policies will eventually be defaulted one way or another by the insurance companies. Have you noticed that Genworth stock is selling in the two dollar a share range? LOOK OUT BELOW.

If you haven't bought LTC, don't.

of @ Dec 08, 2008 22:02:59 PM

LTCi Premium Returned

In reference to the gentleman who is looking into a policy that would return unused premiums - Most carriers offer this rider. It is called Return of Premium Rider and will return any premium that has not been used up in claims to the beneficiaries. However, since it is a rider and will increase the cost of the policy premium, you might also look at taking that extra cash and purchasing a life insurance policy - which, in may cases, will affect a better return.

In my 25 years in this business, it amazes me that folks very often ask "What if I never use this policy?"...do you ask the same question of your homeowners or auto insurance companies? And yet, the potential cost of your LTC services could make the cost of replacing your wrecked car look like peanuts. This insurance is a bargain any way you look at it.

Barbara Stahlecker of SD @ Dec 08, 2008 15:59:39 PM

With Long-Term Care Insurance: Past Doesn't Equal Future

There is no question that economic situations change and when they do people can be impacted.

However, it is important for consumers who are concerned about how they or their family will deal with the future need for long-term care, to understand that the past does not necessarily equal the present or the future.

Many of the policies issued years ago were priced properly for the time. At that time, interest rates that would be earned on the invested premiums was say 7 or 8 percent. Today, they are say 3 percent.

Leading actuaries will tell you that for every one percent decline in interest rates, an insurer would need about a 10% increase in premiums. Just one example of what happens.

So, while lower interest rates were great for those re-financing their mortgages, they were lousy for long-term care insurers.

BUT, the important point to understand is that regulators have learned much in the past decade ... so have insurers. And interest rates can't go much lower.

That's not to say consumers should not ask their agent about the ratings of the insurance company being considered. But, it would be a big mistake to allow one incident to tarnish an entire industry that paid out $3.5 billion to 180,000 individuals in 2007 (and will undoutedly have paid more in 2008).

Jesse Slome, Executive Director

American Association for Long-Term Care Insurance

http://www.aaltci.org/long-term-care-insurance/

Jesse Slome of CA @ Dec 06, 2008 17:21:57 PM