What happens if a LTC insurer goes out of business? How common does this happen?

Each state has a guaranty fund. Here is the national website:  http://www.nolhga.com/  It describes the entire insolvency process. Basically, the guaranty association cooperates with the commissioner and the receiver in determining whether the company can be rehabilitated or if the failed company should be liquidated and its policies transferred to financially sound insurance companies. Once the liquidation is ordered, the guaranty association provides coverage to the company’s policyholders who are state residents up to each state’s limit. There is a great FAQ section on the national site.

This is an extremely rare situation with LTCI.  Conseco Senior Health Insurance Company and Penn Treaty are the only ones not taken over by another carrier to my knowledge.  Conseco is in an independent trust managed by the state of Pennsylvania.  Penn Treaty’s home page addresses the issue in case they are ordered into receivership. http://www.penntreaty.com/Rehabilitation/GuarantyAssociationCoverage.aspx  There is also a link to the coverage limits for LTCI and Med supp from the Penn Treaty site.  Most states have at least $300K for LTCI.  These issues happened due to liberal underwriting, high commissions, low premium.  That formula simply doesn’t work for the LTCI market and it sure doesn’t work in a bad economy.   Companies can’t get away with that fatal combination anymore thanks to the NAIC Rate Stabilization that was passed back in 2000. It has taken a decade for states to adopt it but it has some teeth in it. However, NAIC is working on additional rate stabilization regulation. That section starts on p. 144 of my new book. You can get it here: https://www.gotltci.com/online-store/


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    • Michael. Dailey on March 10, 2021 at 6:29 pm
    • Reply

    Hi. I’m paying over 5000.00 a year to. Genworth L. T. H. C and reading posts about people having problems with. Genworth paying claims I’m getting nervous about continuing paying if the have a poor reputation of paying legitament claims. Could you please if possible give me your honest opinon of this co. And it’s solvency. What is your opinion on the customer satisfaction aspect and its viability to stay afloat if the fail to merge with. Chinese company. Im 78 and don,t want to pay anymore money if there is a possibility that claim will be delayed if needed. I have only myself and no family members to chase these people. Thank you

    1. Hello Michael, yes, I believe that Genworth will pay the claims so please don’t give up your policy! Just in case you need help, I am referring you to my friend Linda Jahnke as she helps people for a small fee through the entire claims process. Her email is linda.jahnke@jcltca.com and her phone is 858-513-8351. FYI, I receive no compensation for her services.

    • Sharon Scott on February 5, 2021 at 2:39 pm
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    Thank you Phyllis for the information. My husband and I are 76 years young and have LTCI since 2006. I have read horror stories on the internet of Genworth not honoring their policies. What do you think about Hybrid Insurance? We don’t know what the increases will be yet for this year. We were considering the contingency option but now after reading your answers are not sure.

    1. Oh Sharon, please do not make any decisions about your Genworth policy until you talk with me. https://calendly.com/phyllis-shelton

    • Brian G on October 18, 2020 at 6:39 pm
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    Does the acquisition of Genworth by China Oceanwide allow the new company to leave the states and not be under the regulatory umbrella and state guaranty funds protection afterwards? What is it that keeps the new company compliant and under supervision-even if they are owned in another country? Thank you.

    1. No, the purchase by Oceanwide does not change any of the laws, regulations or guaranty association protections relative to Genworth’s insurance businesses: long term care, life, or annuities. Genworth is still a US domiciled insurance company under foreign ownership.

    • Joe B. Woods on August 12, 2020 at 3:16 pm
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    I have read all the comments and your reply, which have all been very helpful. My wife and I purchased Genworth LTC policies 13 years ago through AARP Health. We purchased them in GA and still live in GA. Our benefit period is 5 years and compound 5% per year with no coinsurance payments. The elimination period is 90 days. The latest increase is 11% (not bad). I am 75 years old and my question is, will Genworth still be around when needed and will there be a problem in payments? You replied to S. Stoll ” Genworth is doing everything possible to honor all commitments”. Does that mean that they are not fulfilling some contracts?
    Thank You very much,
    J. Woods

    1. Hi Joe – Genworth has fulfilled all obligations to date. I have faith Genworth will be there for you and your wife. You have an excellent policy – great benefit selection! Genworth will pay in all 50 states so no worries about your location. If rates go beyond what is reasonable for you, Genworth will likely let you reduce your inflation to 3%. Your benefits have almost doubled with the 5% compound so you should be in good shape unless you live to be 100! Try to hang onto it as long as you can, but that would be a reasonable change. IMPORTANT: any time you consider reducing your benefits, compare the premium you will save against the benefits you will lose.

    • s stoll on June 22, 2020 at 4:09 pm
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    A very informative site!
    We bought Genworth LTCare ins in 2006 & did a 10 yr prepay for lifetime costs by 2016.
    Our Financial Planner keeps telling us not to worry as every state has a guaranty fund, rarely used.
    We’re healthy 79 & 86 yr old Michigan residents, he with Alz now.

    But when the China Oceanwide sale goes through, it won’t be a US company..in any state
    I feel very uncomfortable & can’t find anything on this coverage matter. Do we need more LTC insurance instead

    1. So glad you find my site helpful! Your policies were issued in Michigan and the Michigan guaranty fund still applies. You can go to this site and learn all about how the process works. https://www.nolhga.com/ The Policyholder Information tab allows you to go to your state. Michigan’s fund covers $300K for LTC insurance. You were smart to do a 10-pay as that has protected you from the most recent rate increases from Genworth. At your ages, and especially with your husband’s health issue, my advice is to stay where you are. Genworth is doing everything possible to honor all commitments.

    • Roger Sabo on April 13, 2020 at 7:37 am
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    My wife and I took out a LTHC policy with Genworth ~ 10 years ago when we lived in CT. We have moved to FL and are permanent residence. Genworth has increased our policy 25% in the last 2 years. I am 75 and my wife is 72. With the financial issues Genworth is having and the strong possibility of continued increases, what would you recommend we do going forward? Also I called Genworth to ask if there was any planned relief regarding the current Corona 19 virus. They have not made a decision yet. Any help you can offer would be appreciated.

    1. Hello Roger, a 25% increase is low in this day and time. Yes, Genworth can certainly have more increases. A spot of good news is that the China company that has been trying to buy them since 2016 is still in play. You can read the article here. One thing you should do is compare the premium you have spent with the benefits you will have in another 10 years. If you would like me to be more specific, please book a time on my calendar here.

    • Kirk Semler on September 18, 2019 at 6:56 am
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    Dear Phyllis,

    I see the advice above to Ross advising him not to give up his Long Term Care policies dated June 2015. Two aspects; first, same advice in Sept 2019? My wife and I have had our policies only about 4 years. I am 66, my wife 63. Second, is Pennsylvania different in their ability to cover bankrupt companies?

    Kirk Semler

    1. Without knowing your entire situation Kirk, it’s hard for me to make a blanket statement. I rarely advise people to give up their policies. You are probably referring to Pennsylvania stepping in to rescue Penn Treaty, a company based in Pennsylvania that went insolvent. No, Pennsylvania is not different. That’s just what that state decided to do to help. All states as well have the state guaranty fund to help pay claims in the event of insolvency. You can read about that here. If you wish to contact me directly with more questions, please email phyllis@GotLTCi.com.

    • Roger Chitty on September 11, 2019 at 11:52 pm
    • Reply

    Sept. 11, 2019

    Hi – I just received a notice from Genworth Life that my Long Term Care Policy rates are going up 55% and will go up at least 140% in the next 5-7 years and I have been provided with 4 options on continuing. The 4th option is to select the Contingent Non-Forfeiture option of which I have $26,646.76 in (Paid-Up Policy Benefits). The first 3 options are so out of line – I would like to know what this 4th option means? Thank you.

    1. Roger, that 4th option is the worst in my opinion. It means you lose most of your great benefits as Genworth will pay a claim at any point in the future equal to that amount of money…so maybe a few months of care. If you would like my advice on the other three options, please email your rate increase letter to me at phyllis@GotLTCi.com or fax it to me at 615-590-0307. Then book a time on my calendar so we can go over your situation together via phone and screenshare. https://www.gotltci.com/ltciconsultations/suzeorman/

    • Judith Garrett on August 15, 2019 at 9:42 am
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    Hi, my husband and I both have a long term care policy through Genworth. Genworth is being sold to Ocean Wide of China. We have had our policies for 20 years and they are projecting increases of 104% over the next 2-years. We live in Georgia and they approved an 18 percent increase for 2019. Our policy has over doubled and we are unsure what do. If this deal with China goes through, do we have any protection if they should go bankrupt or the if the company just decides to dump the long term care part? Unfortunately we do not have the partnership policy. We have to decide by 8-24-19 if we want to continue, select a reduced benefit or just stop paying. Please can you help. Thank you so much.

    P.S. We are 79 and 75 respectively.

    1. Hello Judith, the Chinese company should give Genworth more financial stability with which to pay your claim. If you bought inflation coverage, you should have been grandfathered for a Partnership policy. The Georgia insurance department is fairly strict about the amount of rate increases it approved and you can see that as you only received an 18% increase this year. So regardless of what Genworth predicts, they can only implement what Georgia approves. The company can’t decide to dump LTCi coverage. You have a contract regardless of Genworth’s ownership. Buying your policies 20 years ago means you started with a low premium and even though it has doubled, it is still great compared to today’s prices. Considering your ages, my advice is to keep the coverage in place and pay the rate increases. You receive a letter with each increase giving you options, so if you would like my help with the 2020 increase, please send a copy of the letter to me at phyllis@GotLTCi.com or fax it to me at 615-590-0307 and I will be glad to help you analyze the options.

    • Richard Vaughan on June 28, 2019 at 3:13 pm
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    Just received notice of an 80% increase in both our LTC policies. Is this to be expected every year now?

    1. absolutely not Richard. If you will email or fax the letter to me, I will be glad to help you better understand what is going on. phyllis@GotLTCi.com or fax 615-590-0307

      • Kathleen Clemens on August 31, 2020 at 7:11 pm
      • Reply

      As many others above, my husband and I purchased LTCI from General Electric, who then became Genworth. We have about $60,000 in paid premiums invested in this company. We currently live in California and purchased the policy in California. You have advised the others to hang on to their policies and bank on the state insurance commissioner to pay for benefits when it is needed. Will we still have this state benefit if we move to another state?

      1. Every state has a guaranty fund. You need to go to http://www.nolhga.com and see the amount for LTCi. CA just increased its coverage for health insurance and LTC insurance falls under that banner. As of June 30, 2020, the max is $615,525. You need to check the state to which you are moving to see the max. Please allow me to correct your understanding that I am saying to always hang on to Genworth and depend on the state guaranty fund to pay your claims. There are times I recommend an alternative based on age and health if it makes sense. If you would like me to review your coverage and give you my opinion, please reserve a time with me https://calendly.com/phyllis-shelton

    • Sue Sonkin on April 3, 2017 at 8:10 pm
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    We are Genworth LTC policy holders. With the Chinese acquisition looking sad, we are concerned. We purchased these policies when we were residents of New York and do have the New York State Partnership. We now live in New Jersey , but not necessarily permanently. Do we have any protections if Genworth fails? Advice and guidance would be appreciated.

    1. You were wise to buy a New York Partnership policy as the asset protection will transfer to 40 additional states. You can see a map of the states here. Each state has a guaranty fund, which is designed to help policyholders in the event the insurance company cannot pay claims. You can look up information for any state here.

    • Suzanne stevens on February 22, 2017 at 9:28 pm
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    Genworth is selling its longterm insuraznce. Premiums are on the rise. We need help but are getting nowhere with this company. What should we do?

    1. The Chinese acquisition is the best thing that could happen for Genworth to get it back on solid financial standing. It hasn’t happened yet though if you look at this article. I do know some people at Genworth if you would like to email me what you need. You can always call the policyholder service department at your state’s insurance department but I’m happy to try to help you before you do that. Please email me at phyllis@gotltci.com with your policy # and question(s). Phyllis Shelton

    • Keith Steva on June 13, 2016 at 11:06 am
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    Hi Phyllis,

    With a Genworth, New York Life, or OneAmerica Long Term Care (LTC) insurance is the “premium” insured or the benefits? Other words if I have paid $50,000 in premiums for $500,000 of benefits, and the company goes out of business, am I covered for $300,000 (South Dakota) of benefits when I enter the nursing home or only $50,000?

    1. Hi Keith this is an easy one. The coverage is for benefits, not premium. Good answer, right?

    • Chuck Paulson on April 17, 2016 at 2:29 pm
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    My wife and I both took out 15 year term life policies through Genworth Annuity and Life Insurance. We are both 72 and don’t want to look for a new company if possible. I have 8 years left on my policy and my wife has 10 years left. Does Genworth have a federal or state guaranty program for policyholders in place? Our understanding is that a guaranty program is required by law to cover policy payouts if the company goes out of business. Please advise

    1. Every state has a state guaranty fund Chuck and it covers life insurance, health insurance, annuities and long-term care insurance in varying amounts. Simply go to enter your state to see how it works in your state. This is a state fund, not something set up by Genworth or any other insurance company.

  1. thank you fr the information it was so helpful in eleviating my fers of genworth not continuing to fulfillthe contract for my long term care.

    • Ross Reineke on June 16, 2015 at 8:33 am
    • Reply

    My wife and I both have LTCI policies with Genworth Financial. Genworth lost 1.2 billion dollars last year. What happens to our policies if Genworth goes bankrupt?
    We have paid our premiums for 10 years now. Wondering if it’s worth paying our premiums this year??

    Thank you,

    Ross Reineke

    1. Hi Ross. I’m so glad you found me. Please do not give up your Genworth policies as you have paid on them 10 years now. Policies cost much more today than they did 10 years ago plus you and your wife are 10 years older. There is a state guaranty fund in every state to monitor companies that have severe financial issues. You can read about it here https://www.nolhga.com/policyholderinfo/main.cfm Genworth has many, many safeguards in place to protect the claims-paying ability.

      If you get a rate increase in the future that you find unaffordable, please request options to decrease your benefits to lower the premium instead of cancelling your policies. I just wrote a blog about that actually along with welcoming new subscribers like you: https://www.gotltci.com/2015/05/welcome-to-new-subscribers-and-how-to-evaluate-a-rate-increase/ Please let me know if I can help you further. Phyllis Shelton

  1. […] a recent blog post, Phyllis Shelton, author of Protecting Your Family With Long-Term Care Insurance, called the […]

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