In an article entitled "Insurer Casts Off Long Term Care Policies" in today's Wall Street Journal, it was reported that Conseco, Inc. has transferred many of its long term care policies into a state supervised independent trust. The move, which affects 140,000 policyholders was made allegedly because "the policies were a drag on the company's earnings because they were underpriced and required continuing capital infusions to meet the long-term needs of policyholders".
Click here for how Conseco, Inc. announced the transaction on November 12, 2008
WSJ reports of fear among policyholders, most of whom are seniors. or families of the seniors. California plaintiff's attorney, Frank Darras was said to have estimated that former Conseco Senior Health Insurance policy owners would have to pay at least $2,083 more in premiums over the next five years under the new trust, a problem for owners whose average age is 80. The Pennsylvania insurance department wasn't specific, saying only that some rate increases are likely to be necessary to avoid insolvency based on current information and projections.
Frankly, and in my personal opinion, this is totally Con SUCKO!
The statement that long-term-care policies are guaranteed up to a limit of at least $100,000 in every state, according to Peter Gallanis of the National Organization for Life and Health Insurance Guaranty Associations or in one-third of states, limits are up to $300,000; and in another third, up to $500,000 gives many little solace.
I have both sold and owned long term care insurance for many years. I feel fortunate to not own a Conseco LTC policy because in Stamford, CT the cost of a nursing facility is $300 per day plus or over $113,000 annually! What good is a $100,000 limit to me?