A large number of long term care insurance policies sold by Conseco Insurance company a number of years ago needed to be moved to a state managed risk pool last month to ensure they would remain solvent. The Pennsylvania Insurance Department took over 150,000 policies– taking an action described as a “shocker”. These were older policies that had been under priced when sold years ago and had been a drag on the insurance company’s revenues ever since.
According to the Insurance Commissioner of Pennsylvania, policy owners impacted by this move should expect to choose between higher rates or reduced benefits. With 8 million long term care insurance polices having been sold in the United States, it is important that every policy owner double check with their insurance company about the solvency of their policy due to these risk pools. Conseco receives one of the lowest ratings among the major long term care insurance companies (B+ by A.M. Best) and higher rated companies such as MetLife, John Hancock and Genworth were not involved in this situation. None the less, all consumers should take the time to make sure they understand the condition of any company before they buy a policy or if they currently own a policy.
This is also an important reminder why seniors and their families need to do all they can to inform themselves of the various funding options available to help pay for the costs of senior housing and long term care. With the impact of this economic crisis being felt on every front, knowledge and access to financial tools will be the key to making it through the coming months and years.