From Thomas J. Annulli
My 88 year old mother has a longterm care insurance policy which would cover nursing home for 3 years with maximum benefit and a quality home. She has had this policy for 15+ years. Last week she received notice that her premium will be increased, for the first time ever, by 39% as MetLife needs to recoup costs associated with this product.
When I called MetLife they actually had the nerve to say “we have gotten out of longterm care insurance because we lost too much money on it.” Their solution offered is to either pay more – which would raise her premium from $3,500 per year to $4,965 per year, or get less monthly benefit (lower quality nursing home) or a shorter benefit period. So, I asked them, what happens if my mother dies without using her policy, do they refund the $52,500 in premiums my mother already paid as she made a mistake thinking she would need the policy? Of course, they said no.
I called the State of Connecticut Insurance Department and got a pleasant person who tried to be helpful and she said that the Insurance Department approved this as it was necessary to recover costs.
I questioned her from a business perspective – MetLife is the one who set the rate 15 years ago, and if as professional actuaries they guessed the cost wrong, they should swallow their lumps and raise the price on new policies – she told me that is illegal, that they must charge everyone the same – that makes no sense to me. Isn’t the primary function of an insurance company to determine an amount of risk they have, and then spread that risk, based on their actuarial tables, among a pool of customers to make money? Not much different that a bookie taking bets on a game?
This makes no sense to me, other than MetLife trying not to payout, and the Insurance Commissioner coddling the large company.
Thomas J. Annulli
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