LONG TERM CARE INSURANCE: Carrier Financial Stability

Is long term care (LTC) insurance a critical financial solutions for many individuals planning for future health needs?

Do you know of someone close to you who experienced a change in health status, needing some form a qualified long term care? Do you recall how quickly this escalated?

Do you know what assisted living costs are in your city? Would you be surprised to hear they are now in the $7000 to $9000 per month range (as of 2026 in the midwest)?

What about having a long term care (LTC) carrier with a solid financial performance? Don't these carriers all know how to make a lot of money!?

The early 1990's brought with them LTC carrier (financial) struggles due to the unpredicted rising costs of claims. Fact is, we saw over 80% of major carriers drop out of the LTC business. The hard lesson learned were; Long term care insurance can not be underwritten like a life insurance policy.

A key factor influencing LTC costs is how carriers underwrite their policies. Let' look closer at the direct connection between underwriting practices and incurred claims, showing why carriers who now focus closely on underwriting tend to have stronger financial stability and long-term staying power.

Underwriting Long Term Care Insurance Costs

Underwriting is the process insurers use to evaluate risk and decide who qualifies for coverage and under what terms. In LTC insurance, underwriting determines the likelihood and expected cost of future claims. When underwriting is precise and conservative, carriers can better predict and control the costs they will incur.

Carriers that apply rigorous, but fair, underwriting standards tend to issue policies with shorter benefit periods or more restrictive terms. This approach reduces the chance of unexpectedly high claims costs.

For example, CNO Financial’s LTC portfolio shows this effect clearly. At the end of 2024, 65% of CNO’s policies had benefit periods of one year or less, and the average liability duration was under 11 years. This contrasts with carriers like MetLife and Prudential, whose policies often have longer benefit periods and liability durations of 13 to 15 years.

One carrier's 'shorter benefit periods and tighter underwriting' appears to help the company manage claims more effectively, resulting in a nearly 6% decline in incurred claims year over year. This disciplined underwriting approach supports more predictable financial outcomes and contributes to recent upgrade from "underperform" to "in line" by analysts.

Claims Trends Among Carriers - Naming names

The financial results of LTC carriers in recent years highlight how underwriting impacts incurred claims:

• MetLife experienced the largest increase in incurred claims in 2024, with a jump of nearly 17%. This followed a modest rise of less than 3% in 2023. MetLife’s longer benefit periods and less restrictive underwriting likely contributed to this sharp increase.

  
  

• Employers Reassurance Corp. (a GE subsidiary), Prudential Financial, and Manulife Financial (owner of John Hancock) also saw higher increases in incurred claims in 2024 compared to the previous year. These carriers have historically offered policies with longer durations and broader coverage, which can lead to higher claim costs over time.

  
  

• CNA Financial, Aegon, Unum, and CNO Financial showed improvements in their incurred claim trends in 2024. Notably, CNO and Aegon reported declines in claims, with CNO’s nearly 6% drop standing out.

  
  

These differences underscore how underwriting strategies directly influence the financial health of LTC insurance products. Carriers that "zero in" on underwriting details can better manage risk and reduce unexpected claim spikes.

Focused LTC Carriers Better With Staying Power

Long term care insurance is a challenging market. Many carriers have exited the business due to sustained losses and unpredictable claims. A carrier that maintains a focused underwriting approach can build a more sustainable LTC portfolio by:

• Limiting exposure to high-cost claims through shorter benefit periods and careful risk selection.

  
  

• Improving claims predictability, which supports better pricing and reserving.

  
  

• Generating consistent earnings, as seen with CNO’s LTC block earning over $30 million per quarter since early 2024.

  
  

This staying power benefits policyholders by ensuring the carrier remains financially strong and able to pay claims over the long term. It also benefits the company by reducing volatility and improving profitability. For consumers and advisors, understanding the link between underwriting and claims costs can guide better decision-making.

Examples -

• Review benefit periods carefully. Shorter benefit periods often mean lower premiums and more predictable costs for the insurer, which can translate to greater carrier stability.

  
  

• Consider carrier underwriting reputation. Companies known for disciplined underwriting are more likely to manage claims effectively and remain solvent.

  
  

• Watch for financial performance signals. Carriers with improving or stable incurred claims trends and consistent earnings are better positioned to honor long-term commitments.

  
  

For carriers, the lesson is clear: investing in precise underwriting and risk management pays off in financial stability and market longevity.

4 Action Steps

The costs incurred by long term care insurance policies are closely tied to how carriers underwrite their products. Carriers that focus on underwriting details, such as benefit period length and risk selection, tend to control claims costs better and achieve more stable financial results. For the LTC insurance market to thrive, carriers must maintain disciplined underwriting practices that support long-term financial strength and policyholder confidence.

1. Ask your insurance advisor for the carrier's LTC premium increase history as it relates to the products available now. As well as the carrier's ratings; A.M. Best, Standard & Poors, Moody's, Fitch are most widely known.

2. Consider looking at 'fully' and 'partially' insuring your LTC anticipated costs in a simple comparison.

3. Get to know the differences in LTC design (i.e., Traditional, Hybrid life, Hybrid annuity).

4. Find out if your employer offers a voluntary LTC payroll deduction benefit. If yes, consider the benefits, costs, and mobility to the roll policy with you if breaking employment in the future.

COMPLIMENTARY LTC WORKBOOK: https://www.joesimon.solutions/forms

CONTACT: js@joesimon.solutions