"If people run out of money, it's often because of long-term care costs,"
But only a smattering of Americans have long-term care insurance, or enough of the insurance, said VanDerhei, research director at the
Current forms of long-term care insurance provide a limited pool of money that can be used to pay for nursing homes and other forms of care that health insurance does not cover and that can quickly deplete retirement savings.
After a person can no longer independently perform a specified number of daily activities, such as bathing, dressing, and eating -- followed by a waiting period -- benefits start.
But fewer than 8 percent of Americans have long-term care insurance, and it paid for less than 12 percent of
Those with the relatively new form of insurance, especially those who bought policies a decade or more ago, have had a ringside seat to an unsettled industry, as companies fled the sector after failing to set sustainable prices early on and thus suffering significant losses.
"The long-term care industry has been in turmoil for probably the last 15 years, if not slightly longer," said
"With their products getting in trouble a decade and a half ago, the industry has been struggling with how to keep their customers happy, their products available, keep the company solvent, keep shareholders happy. It's been a tremendous uphill battle," Rohrbaugh said.
That turbulent history is evident in
Even insurance giants, such as
Big insurers that remain in the long-term care insurance market include
Long-term care insurance policies issued in the 1990s and 2000s before the Great Recession were plagued by numerous problems, chief among them the fact that fewer policyholders dropped them than expected.
In the early 2000s, the expectation was that 5 percent of policyholders would let them lapse, Slome said. Instead, just 1 percent did so, he said.
"If an insurer predicted it would pay
Low interest rates have also forced insurance companies to seek significant price increases to maintain the financial wherewithal to pay claims.
In the 12 months ended
As painful as those increases can be, it is likely that most policyholders would find it impossible to buy replacement insurance with comparable benefits for less, said
"In most cases, I expect that the prices to be charged for new policies being issued in the next few years will be even higher," Fine said.
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