Small States Lead Rise in LTCI Policies Despite Insurer Cut Backs

Unsurprisingly, the states with the largest number of insured residents are among the states with the largest number of residents: California, New York, Texas and Illinois.

Pennsylvania and Missouri were the only states to see a decline in the number of insured residents. AALTCI attributes the fall to lapsed policies and deaths that exceed the number of new policy holders.

In November 2010, MetLife announced it would no longer sell new long-term care insurance policies due to “financial challenges facing the LTCI industry." Guardian Life followed suit in February, announcing it would exit the LCTI market as of the end of 2011, citing a "strategic review in 2010" that indicated it would be better for the company to "focus on growing its life and disability insurance."

Slome told AdvisorOne that in the short-term, LTCI will likely "remain a highly specialized niche with 15-25 players," but added that a "return to a higher interest rate environment […] could again make traditional LTCI more financially attractive."

"I suspect you will see an increase in the number of insurers dipping their toe into the marketplace with linked products," he said, "and after the dust settles in terms of seeing where the CLASS Act finally lands, you will likely see a few insurers reassessing the marketplace."