by KYW's Salil Gutt
We are constantly exhorted to buy long term care insurance. However, a lot of policies have been priced too low and in many instances with poor underwriting. As a result, a number of long term care insurance companies are expected to bite the dust.
A look at the outcome for one such insurance company lets us know what could be in store.
The troubled insurer is Conseco. The result is an independent trust into which they are dumping all of their policies. The trust is starting with some money. The results are predictable and two fold. Dramatic annual premium increases, think 25 % or more, will have many of the healthier policyholders cut their losses and let the policies lapse. The unhealthy people will start to draw down on the assets of the trust until it runs out of money leaving the rest in the lurch.
The message here - long term care insurance does play a role but buying policies from financially weak companies is a total waste of money and no benefits at the time you need them.
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