The End of Unlimited Lifetime Benefits in New Long Term Care Insurance Policies

Prominent long term care insurance carrier Penn Treaty recently announced
that it will discontinue offering the "unlimited lifetime" benefit option on
all new policy forms as of 1/1/2007. Will other insurance companies follow
suit? We think so, as the industry adjusts to changes in the all-too-real
world of care and care giving.

With rising baby boomers life expectancies and broadening offerings in the
care delivery systems "unlimited lifetime"
benefits simply pose expanded and uncertain risk for insurers. This risk
naturally translates to pricing which places "unlimited lifetime" benefit
out of reach for the average consumer, so the insurers are opting to offer
benefits which are limited to a fixed number of years payout or a limited
"pool of money" payout.

This makes sense by insurance standards. Exposure to unlimited risk is not
prudent for most companies, although some carriers may still choose to offer
"unlimited lifetime" benefits to high net-worth clients.

Look for policies to focus more on 5-year, 4-year and 3-year benefits for
long term care. This fits the common care profile, and 5-years of benefits
would allow for transfer of assets under Medicaid guidelines set by the
Deficit Reduction Act of 2005, meaning an estate could be protected while
still qualifying for Medicaid after 5 years of "private pay" through the
insurance mechanism.

We expect more and more insurers to limit their exposure by eliminating
old-fashioned "unlimited lifetime" benefits.
This change affects newly purchased policies, not policies already in force,
and is yet another adjustment as this industry comes to grips with changes
in the world of long term care.

This comes on the heels of the initial round of industry adjustments
reflected in the waves of premium rate increases from 2001-2006 as insurers
corrected for the initial under pricing of policies sold in the 1990s, the
first decade these policies were offered. Considering the likelihood of
future claims due to the cold hard fact that nearly half the population will
need long term care, insurers have a duty to remain financially sound in
order to pay future long term care insurance claims. This just makes good
business sense.

Consumer choices are changing, surely, yet a need still remains, the need to
protect assets from the devastating costs of long term care by transferring
the huge risk of care to insurers though the insurance mechanism. It's
really pretty simple: The risk is very high, and so is the cost of care,
and there is simply no other vehicle than insurance coverage to protect your
savings and investments.

Internet users can arrange for free, comparative rate quotes from respected,
top-quality companies by searching online for "long term care insurance
buyers advocate".

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Long term care insurance activist, Clay Cotton, writes for
http://www.PrepSmart.com - The Online Baby Boomers Decision Assistance
Center, where you get Free Long Term Care Insurance advice, comparative rate
quotes and personal guidance, all while safely at home in your favorite
pajamas and bunny slippers.