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
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
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.
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.