My Comment: Long Term Care insurance is one of those topics agents like myself find difficult to deal with. I learned years ago to talk about life insurance in spite of the fact that the very idea repelled most people. After all, none of want to volunatarily deal with death, much less our own. But intellectually, we recognize there is no escape so we somehow come to terms with the economic implications, and deal with it.

Unfortunately, as life expectancy continues to increase, the cost of long term care becomes an ever larger economic issue for families and for society. But individually, we tend to ignore it since there is no inevitability about it. As an agent with a responsibility to provide rational advice for clients and prospective clients, I’ve reached the conclusion that the hybrid product described in this article is the best answer. It may not pay all the extra costs, but it’s not designed to. It’s designed to supplement your income if you need it, and if you never do, return the money you spent to your family.

By Darla Mercado | InvestmentNews March 18, 2012

As more life insurers abandon long-term-care insurance, actuaries and financial advisers are questioning the viability of the product and arguing that if it remains unchanged, it eventually will serve just a tiny niche market.

“It’s fair to say that this product will continue to shrink and give way to combination products,” said Cynthia J. Crosson, director of insurance at Fitch Ratings Ltd. “Claims are going up and people are living longer; it’s a tough nut to crack.”

Recently, Unum Group dropped out of the group LTC business, and Prudential Financial Inc. said that it would cease offering individual LTC insurance, though it will continue to provide coverage through employer-based groups.

Other notable exits include Guardian Life Insurance Co. of America early last year, MetLife Inc. in late 2010 and Allianz Life Insurance Co. of North America in 2009. Meanwhile, even the largest providers of coverage have had to raise rates.

Long-term-care insurance, which was introduced in the 1980s and gained momentum in the 1990s, is being squeezed by three major forces:

• The increase in life expectancy of individuals buying the coverage.
• The underpricing of premiums on in-force policies.
• Low returns on the fixed-income portfolios that pay claims.

Miscalculations or overoptimistic assumptions about these issues prompted carriers to offer policies at lower prices, expecting to make money as of a result of having to pay fewer claims and getting higher returns on their investments.

Finish reading this article HERE…