MetLife announced this week that it is joining a number of other insurers in discontinuing the sale of long-term-care insurance after paying out significantly more in claims than expected.
MetLife, which is the fourth largest carrier of long term care insurance, says that cutting off new sales will not affect existing customers as long as they keep paying premiums.
Long-term care insurance generally covers those expenses that Medicare and Medicaid doesn't pay for such as in home care, assisted living, adult daycare, hospice care, private nursing home and Alzheimer's facilities.
Apparently, long term care policies sold years ago still are creating problems for insurance companies because the premiums didn't take into consideration that rate at which customers would be filing claims years later.
Not all companies are discontinuing the sale of long term care saying they have figured out how to price the coverage appropriately. For example, New York Life, which has sold long term care insurance since 1988, claims to have never had to raise rates for customers once they have purchased a long-term-care policy. And Northwestern Mutual says it hasn't raised rates since it started offering the coverage in 1998.
Michael Gallo is the senior vice president in charge of long-term care for New York Life. He says the company's coverage used to be significantly more expensive than some other companies. But, now, he says there is less of a difference in prices as competitors have been forced to raise their rates.
Although MetLife is dropping out of the business, you can still buy long term care insurance from other companies such as John Hancock and Genworth. You'll just have to pay more for it.
