Long term care, the insurance industry - fact and a fiction

US insurers MetLife and John Hancock are backing out of the long care insurance market, according to an article by Anna K. Pfaehler in Economic Policy Journal today. The former will stop selling new policies at the end of this week, and the latter is asking for a 40% hike in premiums.

Partly this is because insurers’ investments have performed poorly in recent years, thanks to the artificially low interest rates to which governments on both sides the Atlantic are now haplessly committed.

But also it will have something to do with the volume of claims, and how long modern medical science can keep the sufferer alive. The Family Caregiver Alliance says that 63% of claimants are over 65 but the rest (37%) are younger.
The average stay in a nursing home is 2.44 years, says Long Term Care Link; but over half of inmates are 85 or older, a demographic that is expected to “increase dramatically” in the next 20 years.

I seem to remember an interview with Whoopi Goldberg in which she joked that children are keen for you to pass on “so that they can git yer stuff”, but inheritance is certainly an issue, as well as the increasing burden on the State of the elderly poor. Here in the UK, ever since the Community Care Act of 1990, there’s been a battle between local authorities who were thereby charged with the duty of providing care, and sufferers and relatives who don’t want to pay for it directly.

There is a moral hazard in this financial pressure, and one wonders whether it’s a factor in the government’s seeming reluctance to punish those who “help” relatives to make a quicker end. I think we should resist the temptation and if you possess a Kindle, please read my e-story, “Dignity”!

Rolf Norfolk

Disclosure: author of “Dignity”

DISCLAIMER: Nothing here should be taken as personal advice, financial or otherwise. No liability is accepted for third-party content, whether incorporated in or linked to this blog.

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