NEW YORK—Following a review of its long-term care insurance business, MetLife announced today that it will discontinue the sale of new coverage.
MetLife will continue to accept new applications for individual long-term care insurance policies received on or before December 30, 2010. In 2011, the company will be discontinuing new enrollments into existing group and multi-life long-term care insurance plans. The timing will vary based on existing contractual obligations.
This decision will have no impact on existing customers’ coverage, according to a company release. As long as premiums are paid on time, coverage cannot be canceled. MetLife customers can continue to make coverage changes per the terms of their policy or certificate, including inflation protection offers and requests to increase or decrease coverage.
“While this is a difficult decision, the financial challenges facing the LTCI industry in the current environment are well known,” said Jodi Anatole, vice president, Long-Term Care Products, for MetLife.
Record-low interest rates have caused insurance companies to forecast lower profitability through next year or beyond, according to a report in The Wall Street Journal.
“Insurers lately have been investing the premiums they collect in bonds that, on average, are yielding 1 to 1.5 percentage point less than bonds in their existing portfolios, leading to less investment income,” The Wall Street Journal reported. “The increasing likelihood of sustained low rates and bond yields is one reason life insurers have redesigned and repriced some products, offering less-generous features to individuals. These include long-term care insurance and retirement-income products with minimum-income levels.”
MetLife said it may eventually look to combine long-term care insurance with other products, which the company believes can effectively address the long-term care financing needs of the public as well as its business goals.