I personally have LTC with Met Life and am wondering if I should keep it. It is about 5-6 years old now so my husband and I are both older. We are ages 53 and 55. Would you replace them or do you think Met Life will find a buyer and the policies will survive with minimal increases. I really appreciate your prompt response and always have admired your advice as a LTC specialist. Thanks for sharing. C. Cole

This post was written on February 21, 2011 and many changes have occurred since then. Of the companies below, these are still offering LTC insurance as of 8/1/17: Bankers Life, Country Financial, Genworth, Mass Mutual, Mutual of Omaha, New York Life, Northwestern Mutual, OneAmerica (State Life) and State Farm. Transamerica re-entered the LTCi market a few years ago and a new company is National Guardian Life. To evaluate a rate increase, just figure out how much premium you could pay by age 80 and compare that to the benefits you will have by that time…it should be a huge difference!

I think it was purely a financial decision for MetLife. People are living much longer to collect these benefits and hardly anyone gives up the policy. Low investment earnings add to the problem. We keep saying a large company that is diversified (sells a lot of different products) is the safest. However, just like CNA did several years ago, this is a great example of how a large company can sell off the long-term care insurance if they aren’t getting the profit they want. Companies that have done a huge amount of long-term care insurance have more at stake and are looking to stay in. Examples:

  • MedAmerica Insurance Company (the company that has the State of TN plan, the State of New York plan and Blue Cross and Blue Shield of Tennessee has it on their own employees plus offers through BCBST health insurance agents) is a wholly-owned subsidiary of the Blue Cross plan in Rochester, NY (Excellus Health Plan). LTC insurance is all MedAmerica does since 1987, so they’re totally committed.
  • John Hancock announced a few weeks ago they plan to implement an average rate increase of 40% on 80% of their long-term care insurance business subject to each state’s insurance department approval, and left the large group market. But the good news is they didn’t leave. John Hancock is heavily invested in long-term care insurance with the 2nd largest block of policies in the nation.
  • Genworth is the oldest company selling LTCI (since the mid-70s) and have the largest block of LTCI policies in the nation. Obviously they are fully committed and recently went into the large group market
  • Bankers Life – another company that has sold LTCI second longest and has 3rd largest block
  • Prudential has sold since 1987 and continues to hang in both the large group and individual market when most carriers have left the large group market
  • Unum has the largest presence in the smaller group market
  • Mutual of Omaha/United of Omaha just introduced a new product series and is obviously in the LTCI market for the long haul.

There are many other carriers that are totally committed and haven’t had a rate increase ever…Berkshire Life (Guardian), Country Life, Massachusetts Mutual, Northwestern Mutual, and New York Life are great examples. State Farm has had one rate increase but remains committed.

But yes, the LTCI industry will survive this, and the carriers who stay and are committed will just do better as they will get the business that would have gone to MetLife.

You’re also probably wondering about rate increases, but the big picture is, LTCI carriers have had one or maybe two rate increases over a 20 year period. Can any other product say that? Medicare supplement goes up every year. Car insurance, auto insurance, and certainly health insurance! The only people having real problems are the agents who weren’t clear about the ability of carriers to have a class rate increase, and now is when that comes back to haunt them.

The industry is responding to the rate increase situation.

United of Omaha has a new product that allows one to buy a plan that is paid up in 10 years and a 10 year rate guarantee, so it’s guaranteed premium.

State Life Insurance Company (owned by OneAmerica) has plans that combine long-term care insurance with either life insurance or a deferred annuity that allow the applicant to extend the benefits beyond when the death benefit is exhausted (for life insurance) and when the account value is paid out (for an annuity). Benefits can be extended all the way up to unlimited and have 5% compound inflation. The premium for the entire thing is guaranteed on both types of policies. There are other combo products as well with various guarantees built in.

Posted in: Consumer