MetLife 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.