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Can insurers offer long-term care insurance?

an aging population
MetLife will halt sales of long-term care insurance, a type of coverage that has repeatedly caused problems for insurers and forced some to pay significantly more in claims than they expected.


MetLife is among the bigger sellers of the coverage, with about 600,000 policyholders among the eight million who have long-term care insurance in the US.


MetLife joins a long list of US insurers that have exited the business rather than try to fight for customers in the small tricky market.


Although the name will not be well known in the UK, MetLife is a global life insurance giant that is expanding by international acquisition.


The lengthening list of US insurers leaving the long term care market mirrors what happened in the UK .We are now down to a tiny handful of insurers here.


To put the MetLife exit in perspective, it is as if Chevrolet suddenly said they will stop making cars, as they cannot ever see how they can make money out of it.


So, we now have the two most advanced long-term care markets in the world unable to make it work as an insured concept.


The solution often offered is equity release. This is nothing more than a fancy name for a mortgage for the elderly. Some analysts say the equity release market is a good one, others argue that it has the same potential for misselling as bonds, endowments and other ideas that failed the public. What it is not is long-term care insurance.


There are think tanks, committees, workshops and much more looking at the problem.


Some say that changing the name to care insurance will help, but a name change and makeover does not stop a bad product being a bad product.


But how do you deal with an insurance that insurers do not want to sell and customers do not want to buy?

Long-term care: Hot topic: December 2010


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