At a time when the need for long term care protection is an all time high, seniors are not buying long term care insurance and insurance carriers are dropping their long term care coverage.
All there are several factors that play into this perfect financial storm, the primary reason for this dilemma is two-fold.
First of all, historically low interest rates have hampered insurance companies’ ability to earn a return on their insurance reserves. In order to make up the difference, they have to raise premiums or simply leave the business.
Secondly, a lot more policyholders are keeping their policies than the insurers planned for. Since buyers are dropping coverage less often than expected (lapse rate), there are more long term care claims being made and paid than actuaries calculated.
READ MORE: Learn more about what’s killing the long term care insurance industry.