Baby Boomers, Financial Planning

Long-Term Care Disaster

“We never should have done it, and the regulators never should have allowed it,” Thomas McInerney, president and chief executive of Genworth Financial Inc. since 2013, says of the pricing strategy. “That’s crazy.”

Over half of my clients fall into the Baby Boomer category, and over the years I’ve had conversations around long-term care (LTC) insurance with many of them. A few of them decided to purchase LTC insurance to protect their assets, so when I saw an article from The Wall Street Journal circulating Twitter this week about the decisions some LTC policyholders are having to make, naturally, I was alarmed.

In short, the article explains how policyholders who have paid into and have had LTC policies for a number of years are being faced with a crummy dilemma: either pay a substantial increase in premiums, reduce their potential benefits, or drop the policy altogether. What is so infuriating about this dilemma is the policyholders are forced to make these choices not because of their own wrongdoing; it wasn’t as if they lied on their applications or made poor decisions to cause the likelihood of their need to increase. It was poor planning, underestimating potential claims, and an overcommitment from the insurance companies that caused the problems; the insurance companies actually have the audacity to blame regulators for not stopping them from issuing these policies; these are the same guys who don’t want regulators to make sure financial advisors are held to a fiduciary status–what a joke.

Unfortunately, as it has occurred so many times in my industry, it’s not the companies who made a promise to provide coverage, collected premiums and made tons of money off the polices held responsible for their actions, it’s the policyholders. It’s the individual trying to do what was best for their family who gets the raw deal, and it’s all happening at a stage of their lives where they might actually need the coverage.

If you have a long-term care policy or know a loved one who does, be sure to share this post or the article below with them. I doubt this is the last we hear of this type of responsibility shifting. Fortunately, none of my clients fall into any of the scenarios described in the article…for now.

Wall Street Journal: Millions Bought Insurance To Cover Retirement Health Costs. Now They Face An Awful Choice.


Disclaimer: Nothing on this blog should be considered advice, or recommendations. If you have questions pertaining your individual situation you should consult your financial advisor. For all of the disclaimers, please see my disclaimer page.

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