I heard that MetLife is going to stop selling long-term-care insurance. What will happen to my MetLife policy?
MetLife, which had been one of the largest providers of long-term-care insurance, announced on November 10 that it plans to stop selling both group and individual long-term-care policies. The company will, however, continue to service the 600,000 policies that are currently in force. As long as you pay your premiums, your coverage cannot be canceled.
The company will stop processing group policy applications by November 30, and it will stop accepting new applications for individual coverage on December 30. Employees who have coverage through their employer may keep their policies. But new employees will not be able to purchase a MetLife long-term-care policy starting in 2011, even if their employer has an existing group policy.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
“Assumptions used to price our long-term care insurance products initially have changed,” says MetLife spokeswoman Karen Eldred. In essence, fewer people have dropped their policies than originally anticipated, and the remaining policyholders are living longer -- and claiming benefits longer. The prospect of more and costlier claims -- a problem shared by most long-term-care insurers -- drove MetLife out of the market..
MetLife’s decision came as no surprise to insurance insiders. “About two years ago, the company repriced its individual long-term-care products to cost more than 50% more than the competition,” says Murray Gordon, chief executive of Maga Ltd., a long-term-care broker in Riverwoods, Ill. “Its market share has been in free-fall ever since.”
MetLife is not alone. Many insurers have been hard hit by the open-ended expense of providing lifetime benefits to an aging population with an increasingly long life expectancy (several insurers recently stopped selling policies with lifetime benefits). Meanwhile, low interest rates make it tougher for insurers to make up for pricing mistakes with their own investments.
Several insurers have already stopped selling long-term-care insurance. “Major companies that have exited the marketplace have continued to service policyholders,” says Gordon. “There has been no change in claim handling or other service issues.” In some cases, insurers sold their long-term-care business to another insurer (Eldred says MetLife has no plans to sell its LTC business). But, says Gordon, even when another carrier assumed an insurer’s block of business, “the only thing that changed was the name of the company.”
Many insurers who are staying in the business are also reevaluating their business. In the past two months, the two largest long-term-care insurers announced proposed premium increases for current policyholders. John Hancock announced in September that it would ask state regulators for permission to boost prices on many of its policies by an average of 40%. Then in October, Genworth, said it would request an 18% rate increase for most policyholders who purchased insurance between 1994 and 2001 (or, in a few states, between 1994 and 2004), affecting about one-fourth of its policyholders. Premiums for many of these policyholders had already increased once before in the past three years.
Existing MetLife policyholders are paying higher premiums, too. Beginning in 2008, MetLife filed a request for an 18% rate increase nationwide on many of its long-term-care policies. So far, it has received approval for a rate hike of 9% to 18% in most states. MetLife is also in the midst of increasing rates for policies it acquired in 2005 from the Travelers Insurance Co. Rate increases of 10% to 44% have been approved or are pending on those policies. And the insurer plans to ask regulators soon for a rate increase for its group long-term-care insurance plans, which haven’t faced a rate increase yet.
See Some Long-Term-Care Premiums to Rise for more information and advice about what to do when your rates increase -- and how to decide whether it’s worthwhile to keep your policy as is.
-
Long-Term Care: Other Coverage You Might ExploreLong-Term Care Insurance A third of applicants are rejected from buying long-term care insurance. Here are some smart alternatives.
-
Long-Term Care Insurance: Higher Premiums for Shrinking BenefitsLong-Term Care Insurance There's a 70% chance you'll need some type of long-term care. Getting the right insurance is more complex these days. Here's some guidance.
-
Short-Term Insurance Plans' Good, Bad and Uglyretirement You'll need a clear-eyed analysis to gauge the value of short-term care insurance plans and if they're right for you.
-
Retirees, This Is What It Takes to Be Your Own InsurerLong-Term Care Insurance The costs of long-term care are already exorbitant and will only get worse. Follow this guidance to get in front of the issue.
-
Plan Now for Long-Term CareLong-Term Care Insurance You could buy insurance to finance future costs, but policies are pricey. Here’s how to decide whether you need coverage.
-
A Woman’s Guide to Long-Term CareLong-Term Care Insurance Who needs long-term care insurance … and who might be able to do without it?
-
Long-Term Care Insurance: To Buy or Not to Buy?Long-Term Care Insurance Should you buy long-term care insurance or save up to self-insure? There are many trade-offs to consider. And, surprise: It doesn’t have to be one or the other.
-
You Can Keep Some Assets While Qualifying for Medicaid. Here's HowLong-Term Care Insurance There are some tools you can use to avoid spending down all of your assets, and potentially impoverishing a spouse, while still meeting the qualifications for Medicaid.
