How safe is your long-term-care policy?

A guarantee is only as good as the people who stand behind the product. It turns out that when long term care policies were introduced, insurers misjudged a number of issues.

Executives misjudged everything from how much elder care would cost to how long people would live. Result: these policies are costing insurers billions.

Today those problems are a financial headache for insurers who are losing billions. Tomorrow they could be a problem for the insured. Long-term care Insurance premiums are already rising steeply and several insurers including MetLife Inc. and Prudential Financial Inc. are no longer offering new policies.

“I was mad as hell,” says Arthur Mueller, an 83-year-old former real estate executive who lives in Dallas. Over the past 15 years, his annual Genworth premium has roughly doubled to $6,879.

As the cost of insurance has risen, the number of people buying these policies has decreased. Price is one reason. If long-term care insurance is relatively cheap, people will pay for it. As it becomes more expensive, they will explore other options for the elderly. Family members are going back to providing care and government programs cover much of the rest.

Meanwhile, seniors who have long-term care policies generally continue to pay the premiums, having invested years in these policies and hope that the coverage will be there when they need it.

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