State lawmakers understand the situation, and efforts throughout the country are underway to find alternative, private-market solutions to help pay for LTC services. Ten years ago it looked like long-term care insurance was going to be a major part of the solution. Unfortunately, growth in sales for the last decade has actually declined and serious market disruptions further hampered the product.
The combined impact of MetLife leaving the market in 2010 and The Guardian leaving the market in 2011, multiple rate increases from Genworth and John Hancock as well as states taking over entire blocks of business to ensure solvency, has undermined consumer confidence. Additionally, the CLASS Act may be well meaning but is entirely insufficient to address the magnitude of this problem. At this point. it is all too clear other solutions will be necessary.
Legislative leaders in the states have taken notice of the amount of life insurance in the hands of seniors and are focusing on opportunities for them to use it as a means to pay for long term care. According to the National Association of Insurance Commissioners, there is $10 trillion of in-force life insurance policies in the United States. Of that amount, there is $100 billion to $500 billion in the hands of seniors who could potentially use their policies as a living benefit to help pay for long term care.