by John Darer CLU ChFC CSSC RSP
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
Also see Conseco puts LTC policies in independent trust – InvestmentNews November 13, 2008
WSJ reports of fear among policyholders, most of whom are seniors. or families of the seniors
Ontario 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.
"Conseco wanted to be the industry leader in Long-Term Care. Now it's time for the company to honor what it sold. It looks as if the company is attempting to spin off an eleventh hour Trust, without notifying the very policyholders that will be affected and that is wrong", said Darras. See Top Insurance Expert Calls on 144,000 Holders of Long-Term Care Polices to Protest an Eleventh Hour Conseco Trust – Insurance News | InsuranceNewsNet September 25, 2008
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.
Having sold and owned long-term care insurance for many years, I consider myself fortunate not to have dealt with or owned a Conseco LTC policy. In Stamford, CT, the cost of a nursing facility exceeds $300 per day, amounting to over $113,000 annually. A $100,000 limit would hardly suffice in such circumstances.
Contempraeous Commentary on Conseco
- "Sweet deal for the carrier; bad news for consumers who had counted on their long-term care policies to pay for costly nursing home stays". Conseco Redux – Columbia Journalism Review by Trudy Lieberman December 5, 2008
- Long-term care a long-term problem for Conseco: Losses mount in spite of huge insurance market – Indianapolis Business Journal June 11, 2007
- US panel probes Conseco, Penn long-term care policies | Reuters May 25, 2007
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