Prudential Insurance Discontinuing Group Long-Term Care Insurance
Prudential Insurance of AmericaÂ has announced plans to discontinue sales of new group long-term care insurance next month, according to a company press release. The announcement follows previous hints that it was planning to leave the business, due to complications with this type of product.
What is Long-Term Care Insurance?
Long-term care insurance is a form of coverage that pays for care not covered by health insurance, Medicare or Medicaid. Some of the services it covers include in-home care needs (dressing, eating, bathing and walking), wheelchair ramps, wages for home health aides and more.
People typically purchase it earlier in life under the assumption that they may need this type of uncovered assistance as they grow older.
The debate over whether long-term care insurance is a good investment has been an ongoing question. Some experts say the cost of this coverage, which varies from insurer to insurer, can make a huge difference considering the cost of an in-home nurse, which could easily top $20 per hour.
On the other hand, some say the money could be wasted if a person never needs long-term care. As an alternative, some experts recommend that individuals simply set aside enough in retirement savingsÂ to ensure the money is there, if needed.
Prudential Insurance of America Abandons Product
In recent years, a number of companies have expressed concern over the complicated nature of long-term care insurance. Similar to Prudential Insurance of America, insurance companies like MetLife, Allianz and Guardian have all exited the business, largely because they say it is difficult to anticipate payouts due to the a rapid increase in healthcare costs.
Prudential Insurance of America said this week that, effective August 1, 2012 it will officially discontinue sales of group coverageÂ in all states except Indiana, Iowa, Kansas, Louisiana and South Dakota. In those states, the companyÂ will continue to offer products for a period of time, as required by law.
The company said discontinuing sales of long-term care insurance will help it become more profitable in its core group life and disability lines of business.