Long-term care insurance still has a bright future, LTC Financial Partners said in a statement following MetLife's exodus from the LTCI market last week.
MetLife announced on Nov. 11 it will no longer sell new long-term care insurance policies for individuals after Dec. 31, and will no longer be accepting new enrollments into existing group and multi-life LTCI plans.
"It wasn't the end of the world," said Cameron Truesdell, LTCFP's CEO. "The industry is not in decline. Quite the opposite. Our best days lie ahead."
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Truesdell says two facts reinforce this statement: First, there is still a growing need for coverage. According to the U.S. Department of Health and Human Services, at least 70 percent of people over age 65 will require some long-term care services at some point in their lives. And Prudential Financial Inc. notes 74 percent of consumers ages 55 to 65, polled for a recent survey, said they are concerned about needing some kind of long-term care. "That's about three in every four of us," says Truesdell.
In addition, nearly 80 million baby boomers are now transitioning into retirement. With about three-fourths of them likely to need care in the not too distant future, "think of the implications on how to pay for it," says Truesdell. He predicts that LTCI policy sales will accelerate. His own organization is already experiencing increased demand. For three years in a row –2008, 2009 and 2010 — Inc. Magazine has named LTCFP one of the 5,000 fastest-growing companies in America.
The second reason LTCI's best days may lie ahead is the scarcity of good ways to pay for care, other than private insurance. "Consider the alternatives," says Truesdell. "They all leave a lot to be desired."
Medicaid, currently the largest source of LTC funding, is available only to impoverished citizens or those who impoverish themselves by exhausting their assets. And budget-strapped states are looking to ease their Medicaid burdens.
Health reform's long-term care provision, the CLASS Act, has uncertain prospects. If it survives Republican challenges and becomes operational, it will cover only part of potential care needs, and only for eligible employed people after a five-year waiting period.
Self-funding for long-term care works well only for the wealthy. With annual expenses that can exceed $100,000, the rest of us may deplete our resources after a few years.
Care provided by a family member can take the place of professional care, but only at great personal expense, usually by women who sacrifice earning power, freedom, and — often — health.
Truesdell draws a parallel between the LTCI and auto industries. "Originally there were hundreds of car manufacturers. Most of them left the business, but that didn't mean the industry was on a path to extinction. When it got down to the Big Three — Ford, General Motors, and Chrysler — that's when car sales really zoomed."
Truesdell acknowledges that the LTCI industry is experiencing growing pains, and that some carriers may need to refine their offerings and raise rates, "but that's healthy," he says. "Sound policies, with a solid company behind them, are worth their cost; they're one of the wisest investments a person can make."
Truesdell also reassures LTCFP clients who have purchased MetLife policies. "MetLife has reiterated their commitment to their current LTCI policyholders and certificate holders. And they've assured us they will keep up their same level of quality service, particularly at claim time."
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