Over the last three years, Unum , Guardian, MetLife, Allianz and now Prudential have all exited the Individual Long Term Care market. There looks to be a real possibility that this market will cease to exist.  Insurance companies are unable to predict the long term cost of assisted living. They claim they are unable to make enough interest off of premiums to fund long term care cost.


In the last few years Individual Long Term Care policies locally and the rest of the country have sky rocketed in cost. This makes for an interesting situation. On one hand the truly wealthy are able to self fund their long term cost. The poor and lower middle class will deplete assets so that they can qualify for Medicaid long term care coverage.  So that leaves the middle and upper middle class with the burden.  


With the middle class there is a good chance of adverse selection happening which will create a death spiral for the LTC policies. An adverse selection is when the high utilization people take a policy and the healthy do not.  When this occurs you have a death spiral or when the market is not longer viable.


It looks like the Individual Long Term Care market is already in a death spiral. When you all ready have 5 major players in the market pull out that is not a good sign.


Consumers might want to consider picking up a policy now while there is still a market for it. Even a base plan with basic coverage can be a key component to helping with long term costs.