In the recent article on long-term care insurance (“LTC Carriers Dumping Policyholders,” April 2013), Financial Advisor missed a valuable opportunity to have a fair, reasonable discussion on the current state of the long-term care insurance industry and the options available to individuals, effectively doing a disservice to advisors and their clients alike.

The article places a disproportionate focus on the issue of rate increases for LTC policyholders. We don’t deny this is an important issue, but the ongoing focus only on rates—especially when the discussion is buoyed predominantly by the use of sensational examples like the 76% increase cited in the opening—serves to obscure the more important, and very real and complex problems facing retirees.

As the LTC industry has emerged it has faced challenges—driven in large part by some firms that entered the business with pricing assumptions that didn’t hold up well over time. What’s more common however, are the numbers of individuals and families that are currently struggling with long-term care issues, and lack the resources to adequately address them.

Longevity risk stands as one of the chief issues in retirement planning today, and the odds of facing a long-term care event grow right alongside it.  Advisors have a responsibility to help their clients understand and address this risk. For many individuals, LTC insurance translates into flexibility and choices—for themselves and their families—at a time in their life when they are likely to be most vulnerable.

The LTC insurance market is still relatively new and maturing.  It is undeniably important for the media and others to bring due attention to issues such as fee increases and the departure of major players. But it is equally important that advisors understand that there are strong and committed providers in the space, and guidance they can provide to help clients secure their financial futures.

In its focus solely on fee hikes, this article neglects to mention that Northwestern Long Term Care, the second largest provider of LTC insurance, has successfully navigated the challenges of the LTC marketplace with the interests of its policyowners first and foremost. Notably, it has never raised rates for its in-force policyholders.

A disproportionate focus on rates and the failures of providers that have come and gone obscures from view the financially strong and committed providers in the industry. Moreover, it distracts advisors from addressing head-on an issue that can, in the course of one event, wipe out a lifetime of diligent retirement planning.
Steve Sperka, vice president
Northwestern Mutual