MetLife Ends Sale of Long Term Care Insurance as Costs Increase

NewImage.jpgMetLife announced it’s discontinuing the sale of new long term care insurance coverage (LTCI) on Thursday.  The decision comes after an extensive review of the business but will have no impact on existing insureds’ coverage as long as premiums are paid on time.

All current insureds can continue to make coverage changes per the terms of their policy or certificate, including inflation protection offers and requests to increase or decrease coverage.

“MetLife remains committed to our current LTCI policyholders and certificateholders and will continue to ensure that they receive quality service, particularly when needed most – at time of claim,” says Jodi Anatole, vice president, Long-Term Care Products, for MetLife. “While this is a difficult decision, the financial challenges facing the LTCI industry in the current environment are well known.”


The company said that many Americans remain at risk for needing long term care services at some point in their lives and it’s committed to exploring potential solutions.  This could be by combining LTCI with other products, which the company believes can effectively address the long-term care financing needs of the public as well as its business goals.

According to the Wall Street Journal, MetLife is among the bigger sellers of the coverage, with about 600,000 policyholders, or about 8%, among the eight million who have long-term-care insurance in the U.S., according to the company and an industry trade association.

The announcement comes as a surprise and at a time when companies like John Hancock Financial are asking state regulators for an average 40% increase for most of its long term care policyholders.  The insurer, a unit of Manulife Financial Corp, also suspended sales of new long-term-care plans to employer-benefits programs.

According to data from Reverse Market Insight, MetLife is the second largest reverse mortgage lender in the country, endorsing 2,658 HECM loans in 2010.

There has always been speculation about how its LTC division could compliment the reverse mortgage business.  While there are strict guidelines against cross selling in place, one could argue using a reverse mortgage to fund a LTC policy can benefit borrowers.

Other companies like Genworth and LTC Global are also involved in both the reverse mortgage and LTC business, it will be interesting to see how this all plays out in the next couple years.

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  • >> one could argue using a reverse mortgage to fund a LTC policy can benefit borrowers.

    Several of my clients got their Reverse Mortgage specifically so they could afford the premiums of a LTCi policy. Both solutions help them stay in their home as long as possible.

    • Raymond,

      Is LTCi helping your clients stay in their homes? That will never be known until these custormers see a positive return on their investment. Unfortunately, the costs of the insurance not only includes the costs of the insurance but the costs of the reverse mortgage as well. Like me, many senior advocates doubt your claims.

    • Unfortunately, having/getting it before your carrier pulls the plug offers limited protection: I have a MetLife LTCI policy and received notice of a 42% premium increase shortly before they announced their exit from the business.

  • The main idea behind LTCI is being able to stay at home if one wishes to. Your “senior advocates” are dead wrong (dead is OK btw, it is being debilitated that stinks). Any one that advises against LTCI should have to sign a note stating their reason(s) and that note should be dropped in a person’s important papers file. Sorry, Critic, but this is a serious issue for me and other “senior advocates/financial planners”. Also, a planner that does NOT discuss/offer LTCI could be criticized for doing an incomplete plan.

    • dduck12,

      The financial effectiveness of LTCi is an issue which will be debated long after we are no longer blogging. It is my opinion that any LTCi sales person should be required to document why the purchase of LTCi was economically appropriate for a client.

      • As should the Federal government, the current administration and all the states that give tax breaks to LTCI purchasers?

      • dduck12,
        The trouble with the LTCi deduction is even people who itemize can rarely utilize medical deductions due to its 7.5% AGI floor. It seems this is more of a smoke and mirrors deduction rather than anything of real economic substance; it rarely costs the feds or the states a dime. This is more of a concession to the insurance industry and thus an illusion than anything of real economic value to buyers of LTCi.
        HUD has made it clear that it does not view LTCi as necessarily an appropriate use of HECM proceeds. As part of HERA, a Democratically controlled Congress repealed the provision which lowered the upfront MIP costs of HECMs if the borrower used the proceeds remaining after all upfront costs, set asides, and lien payoffs to buy LTCi. So on one hand, Uncle Sam seemingly giveth (tax deductions) while on the other, Uncle Sam taketh away (lower HECM MIP). HUD was so unhappy with the provision that for over eight years it never implemented the provision even though it was made law in 2000 under President Clinton.
        By this comment, I just wanted to make it clear that more than The_Critic question the economic value of LTCi. That is not to say it never has value; anyone who would argue that position is simply attempting to irrationally ignore what will be the inevitable for many of us. While LTCi will no doubt be beneficial for some, it will not necesssarily be beneficial for all.

      • Nothing is for ALL people including a RV. NY State gives a CREDIT of 20% and other states also have deductions or credits, and the Frankenstein HCR bill has a LTCI type program. So, I dispute your and Critic’s opinion, and say that most people need LTCI or better have a daughter to wipe their behind (sons punt), or try and find a nice smelling nursing home that accepts Medicaid once you’ve spent all your assets and income down. BTW, Do you guys have Homeowners insurance? Remember that was revolutionary as was insurance to pay off your mortgage when you die. As far as planners go, you are dead wrong, and I would sue an advisor, or one who professes to be one, who advises against LTCI and the worst happens.
        As a frame of reference, I am currently retired, although fully licensed and hold CLU and ChFC designations, but I am not selling LTCI.

      • dduck12,

        I have personally met with attorneys who provide LTCi as well as life insurance who are much more persuasive without being quite so vulgar. I have even met with Barry Kaye and his staff and have been taken through his wife’s museum as part of a sales presentation. Many rattle on about malpractice as if it should be the sole standard by which advice is rendered. With some advisors threats are useless and, in fact, backfire.

        You would be surprised whom I have advised; you know their names. LTCi is but a small factor in some financial planning. Based on its value, I recommended it to many. By threat I would recommend it to none.

        And, yes, I have most certainly advised against it as I hope you have based solely on merit. It can be a valuable product but it is definitely not for all. Like most, your selling position is that of fear rather than its intrinsic value. With me it is better to stick to value without so much vulgarity.

        And, yes, based on your prior blogs, I know your designations, that you are retired, and even some of your regrets.

      • Vulgar? Life is vulgar and I don’t think describing real life fixes that some people I know have wound up in, if you are referring to my behind remark and the smell of some Medicaid available nursing homes. To attack my motives is OK, since I know that I have always sold products based on appropriateness. Yes., I feel a “planner” that does not discuss the merits and minuses of LTCI is remiss. But, to start out as an adviser with a negative attitude towards the appropriateness of LTCI as part of an overall financial plan, may not properly serve the client. Just as the “planners” and accountants that I talk to that think RMs are a “lousy, costly product”, that I defend. I do apologize if I gave the appearance of threatening anyone, I am merely trying for us all to do the best for clients. I repeat, I don’t make a dime selling LTCI nor when I advise clients friends, that they MUST have valid will and health care proxy, etc.

      • dduck12,

        Despite all you say, it seems consumers are not of the same opinion. MetLife had the biggest stake in the market is no longer going to issue new policies. Something seems amiss. Can you explain?

      • To Critic and Cynic, Met stopped selling because (you can read the article);
        because of too many claims and too low investment return. They were not the largest, btw, it is John Hancock (seeking premium increases). Why because many people are using these policies. PS, most planners I think do favor LTCI, CPAs not so sure. My reference to Homeowners and Mortgage insurance was for the historical point that some insurance products don’t take off and are initially ridiculed. I think, what with tax deductions, government encouragement and education, that sales will increase. Please don’t mix RMs with LTCI, I don’t have to justify the appropriate use of the product. And, I apologize to all, Veal, C and C, for being too strong on this subject (perhaps visiting too many nursing homes has influenced me unduly.)

      • dduck12,

        Something pushed your buttons.

        First of all not all financial advisers agree with your position. If every CPA and CFP took the position you do, I would get my LTCi endorsement and would be out selling LTCi. MetLife would still be selling new policies and sales would be up not down.

        You must truly be a busy man suing so many advisers.

        What does homeowners’ insurance have to do with LTCi? HUD requires all HECM buyers to have homeowners’ insurance but not LTCi. While Medicare, Medicaid, and the Veterans’ Administration provide some LTCi type coverage, there is nothing similar in the way of homeowners’ insurance. So I am sorry, I don’t get the similarity.

        I believe in LTCi but your comment is just a little over the top.

      • dduck12,

        I read the article days ago. It was okay but added no new information to consider when looking at LTCi. In fact, in parts it was rather mediocre but thank you for recommending it.

        LTCi is your mission and passion. Recommending LTCi is not my mission or passion. It is nothing more than a necessary evil for many.

        Since I have never practiced in New York and have done little income tax work for its residents, the NY LTCi tax credits are of little interest. All of my former clients were residents of states west of the Hudson River. Net of the federal income tax benefit for the payment of state and local income taxes, the 20% NY credit you point out will generally be worth far less than a 20% overall reduction in all income taxes.

        I respect your passion for LTCi but not necessarily your method of persuasion. Sell value with reason; it will definitely go a lot farther with people like me. I do not accept threats well.

        Al Capone allegedly said that when he was a small boy his mother told him to use a little sugar when he wanted someone to do something. He said he found a little sugar with a gun worked better. Next time try a little sugar with your version of a gun.

      • I disagree with your statement that

        “HUD has made it clear that it does not view LTCi as necessarily an appropriate use of HECM proceeds.”

        I’ve been doing some research on this subject and the bill you mention. Yes, congress repealed the provision but I’ve been told by two people who were involved with the bill that AARP was the one that killed it…. haven’t been able to find out why, but it wasn’t HUD.

        HUD has been against requiring borrowers purchase any financial product as a requirement of the HECM, but I’ve never seen anything from them saying LTC isn’t an “appropriate” use of proceeds.

        Did I miss it?

      • Admin,

        I would point to several things:

        First is the following statement from a HUD “Policy Development and Research” white paper: “By decreasing the cost of borrowing or increasing the flexibility in spending the HECM proceeds, the LTCi HECM program could be made more appealing to the middle class, the group for whom LTCi is most appropriate and who are most likely to consider using the proceeds for this purpose.” The statement can be found on page 86 of the study and the study can be found at:

        Second, again and again, the study was referenced as the reason why HUD never implemented the provision.

        Third, HUD never objected to the repeal of the provision as part of HERA. While everyone may have the facts correct, what goes on in public debate and hearings is not all there is to the introduction of a provision in a bill.

        Fourth, when the Saver was introduced, HUD never introduced legislation requesting that Congress amend HERA to exempt LTCi from its prohibition on cross selling. Yet the Saver was designed to reduce costs and be more appealing to the middle class, meeting the improvements suggested in the study for making LTCi appropriate for HECM borrowers. With Craig Corn of MetLife on the Saver/HUD committee and in light of the specific wording in the 2003 study, it is difficult to believe that the subject was not at least broached.

        Fifth and finally, in eight long years, HUD never implemented the provision. No one ordered HUD not to implement it.

        By its actions and inactions, could HUD make its position clearer? You decide. You already know my conclusion.

      • Again, I disagree. Your statements while they may make sense to a degree, they’re observations which you’re using to draw a conclusion.

        I’ve spoken with several people on a story that will end up on RMD that as of now, will show that HUD is not against it but like anything there are concerns. The fact that they didn’t try to get it added to bills doesn’t show they’re not supportive of it.

      • Jim —

        I admire your research prowess. History (and policy) supports your assertions on this issue.

  • >>HUD has made it clear that it does not view LTCi as necessarily an appropriate use of HECM proceeds.

    I disagree too. For some time our government and private institutions have researched using Reverse Mortgages to assist with funding Long Term Care, and HUD has never said anything like that.

    • Mr. Denton,

      We are not discussing the entire government or LTC. The subject is HUD and LTC insurance.

      Can you point to even one officially authorized and endorsed US government study on HECMs and LTCi other than the one I do? We are not talking about a grant; I am citing an official HUD document. Do you have one done through the DOL, IRS, HHS, or some other agency?

      It is easy to make statements, not so easy to back them up with facts. If you do not, it is all right to disagree but make your reason factual not just wild and unverifiable claims.

  • Gentlemen,

    Many litigators, defenders, and even in some cases prosecutors refuse to sit CPAs on a jury because “they will hang you on the facts.” What I do not read in even one comment is a single verifiable fact that even comes close to the idea that HUD has even been neutral on using HECM proceeds to purchase LTCi except as I quote from the HUD authorized and endorsed publication on that particular subject. My position is simply historical from the date of enactment of the 2000 provision through the date of HERA enactment.

    Since Raymond Denton, dduck12, and Admin so vehemently disagree, I am sure the word of the two individuals who will be quoted on the subject will prove flawless and supply irrefutable and verifiable evidence that as a Department of the US Government, HUD officially and overtly supported the use of HECM proceeds to purchase LTCi or was no worse than neutral on the subject despite the cited HUD publication which to this day is still linked to and referenced on the official HUD website. Like most of us, I was taught actions speak louder than words especially if those words are principally about “behind the scenes.” I have a little trouble with two people representing the official position of HUD since there have been at least three Secretaries of HUD and three FHA Commissioners since the bill was enacted in 2000.

    The haunting question still remains, why didn’t HUD do even one thing to implement the 2000 provision or at least present ways of curing any problems associated with it? Besides Congress and the President, both the entire reverse mortgage and LTCi industries supported its implementation without even counting the myriads of real financial advisors to whom dduck12 points. There was huge support for it, yet what did HUD do? What did HUD publish on the subject and to what did HUD senior officials point as the HUD rational for NOT implementing the provision even if they did not personally agree with the official position?

    Memories are tricky and convenient. It will be mildly interesting to read their opinions but I am most interested in the verifiable facts upon which the two will demonstrate evidence that HUD supported the 2000 provision and at any point through the enactment of HERA supported the use of HECM proceeds to acquire LTCi. I would love to learn how HUD is now supporting LTCi especially at the time it implemented Savers, which met the critical demographic issues in its official document, yet failed to address LTCi in an amendment to the cross selling provisions of HERA which would not only help seniors who need LTCi but also encourage the growth of Savers (which Raymond wants so desperately to support). Actions speaking louder than words and all of that, their actions on the subject of LTCi seem inconsistent with a currently alleged pro LTCi stance.

    Admin, if from enactment through termination of the 2000 provision, it can be verifiably demonstrated that HUD as a Department of the US Government actually and officially supported the use of HECM proceeds to acquire LTCi, I will gladly find the restaurant where I can enjoy crow pie with you next year at the NRMLA Policy Conference in DC.

    • This quote which you say is “evidence” does not mean HUD is against using HECM proceeds to fund LTC… end of story.

      I’m done.

      By decreasing the cost of borrowing or increasing the flexibility in spending the HECM proceeds, the LTCi HECM program could be made more appealing to the middle class, the group for whom LTCi is most appropriate and who are most likely to consider using the proceeds for this purpose.

      • Admin,

        The paragraph specifically states that HECM borrowers do not represent the group for whom LTCi is most appropriate. I can hardly think of a better way to word such damning praise. Let me make this point as clear as possible.

        Imagine you ask a girl to marry you. She excitedly agrees but for religious reasons has to go through some formalities before getting married, the most important of which is getting her father to agree. Everything has gone well and now you ask her father for his daughter’s hand in marriage. (That to me is like the LTCi industry asking HUD when the new law would be implemented.) He states tradition demands a period for consideration. Months later you get a letter in an envelope from her father but the letter is 20 pages long written by a hired marriage counselor you have never met informing you that another very beautiful and lovely young woman whom the counselor names and you know would be the most appropriate wife for you with the reasons why.

        What would you think? Is her father welcoming you into his family? Her father is attempting to be civil but show his utter contempt for your marriage proposal while damning you with praise. After eight frustrating years of asking her father for the needed approval with no other response, your fiancée finally breaks off the engagement.

        I do not know how to make my attitude about this paragraph any clearer.

      • dduck12,

        That is a very wise and appropriate position.

        There have been a few cases, where I would advise even wealthy individuals to use a HECM to purchase LTCi. The factual settings were complicated but ones encountered with some frequency. As long as the carrier stayed solvent which was and remains likely, LTCi was a sound, economic means for providing for the future.

        I generally agree with the position in the HUD documents but only if LTCi and HECMs were in separate vacuums which they are not. The problems presented were legitimate but perhaps a little exaggerated. In the last analysis it seemed more of a rational for not implementing the provision than a white paper with recommendations on how to get it done. But that is a subjective evaluation. However, considering HERA repeal with no implementation in 8 years, not far fetched.

        The decision of MetLife is not good. It could lead other LTCi carriers to follow. Let’s hope MetLife returns to the market in the near future.

  • The 2000 LTCi provision, one of the last pieces of legislation Bill Clinton signed into law before leaving office, was a triumph of LTCi industry lobbying. It turned out to be a pyrrhic victory for reasons I choose not to address here. While there may be individuals within HUD who supported the provision, I have seen no evidence that HUD officially supported the provision. Its refusal to implement it until HERA repealed it says it all.

    • This is from the article you referenced.:
      Fewer people are signing up for the coverage as some premiums rise, but millions of people approaching old age and their families may wish they had.

  • Wow! Sometimes the blogging on RMD provides a great education. This is boning up on LTCi (maybe a little late in the game since a major carrier is dropping the coverage and another seeks premium increases) made easy with pros and cons presented so eloquently. References are provided as well as debated.

    After caring for family members with and without LTCi, I admit with dduck 12 that LTCi makes home care easier on the family and also that it is never as neat, clean, and analytical as we make it sound. I do worry for those that may find financial hardships in making their payments to MetLife timely in the future. After all, every dime is getting squeezed until it squeaks these days. What if they miss a payment, lose their coverage and find they no longer qualify for the coverage that is available? Isn’t that what happens with most term life insurance?

    But, gentlemen (and ladies if there are some among the various cover names among you), I thank you for an excellent education on the fly as it were.

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