Jul 21

When I first started researching long-term-care insurance about ten years ago, there were only about 4 companies selling it. Today, there are about 130, and that number fluctuates at any given time by 30 or 40, depending on which companies have decided to give it a try and which have decided to check out of the LTC business.
This is a little bit of good news and could be a lot of bad news.
As long-term-care insurance becomes more and more popular, people will be shopping more competitively to buy it, which, as the LTC business becomes more and more profitable, will keep insurance companies on their toes. That’s good news. The bad news is that this industry is in such flux that companies are trying it, and some are deciding it’s not for them. Not profitable enough after a few years? They just close up LTC shop. This has already happened—with Aetna, AIG, and Washington Square, huge companies that tried LTC and decided against it after a while. Another case in point: One of the first times Consumer Reports rated LTC insurance carriers, their number one—rated company was out of the business by the time the magazine hit the stands.
When you buy your LTC insurance, you don’t plan on using it for many years from then, if ever. It is imperative that the company you buy it from will still be there if ever you need it. Let’s say you bought your policy at age fifty-four, when you were perfectly healthy. Fine. Then let’s say the company you bought it from decides it doesn’t want to be in the LTC business anymore when you turn sixty and have been diagnosed with some terrible disease.
What does this mean for you? Do you get your money back? No, of course not, they’ll tell you. Why should you get your money back? We were covering you for all those years, and if you had had to go into a nursing home, well, we would have been there for you. But coverage for you now with another company may be impossible, given your new medical condition. Even if you were still perfectly healthy, it would be much more expensive than it was when you first signed on. So you must buy your policy from a company with a firm commitment to the LTC arena.