Prudential Financial Inc. says it is ending sales of individual long-term care insurance (LTCI) and focusing solely on the sale of voluntary group LTCI products.
Prudential, Newark, N.J. (NYSE:PRU), says it will honor existing individual LTCI policies.
The terms of the contracts, which are guaranteed renewable, will not change, the company says.
Other carriers have dropped individual LTCI product lines, group LTCI product lines, or both in recent years, and many have raised rates dramatically.
Prudential seems to indicate that individual LTCI increases are coming in the announcement of the suspension of individual LTCI sales.
“As long as premiums are paid on time, and benefits are not exhausted, coverage will remain in place, although premiums can be changed subject to regulatory approval,” Prudential says in the announcement.
Prudential notes that it has been selling group LTCI coverage for 25 years, and that the product line complements other group insurance lines, such as group life and group disability.
“The decision to exit the individual long term care business reflects the challenging economics of the individual market and our desire to focus our resources and capital on the group market,” Malcolm Cheung, a vice president in Prudential’s group insurance unit, says in a statement.
Prudential sent producers a memo saying it will continue to pay them according to the terms of their contracts.
The company says it hopes to be a leader in the employer and association LTCI markets.
In related news, Hartford, Conn.-based LIMRA notes that according to a recent sales survey it has conducted, 10 out of the top 20 individual writers of LTCI over the last five years have since exited the market.
The top five individual LTCI carriers in sales for 2011, LIMRA notes, were Genworth Financial, John Hancock Financial, Mutual of Omaha, Northwestern Long Term Care and Prudential Long Term Care.
Also according to LIMRA, in 2011, new annualized premium for individual LTC increased four percent for the year, to $546 million. Approximately 230,000 Americans purchased individual LTCI in 2011, two percent fewer buyers than in 2010. Having shown modest growth in recent years, LIMRA estimates that over 7 million Americans have stand-alone LTCI today. A majority of whom (roughly 2 out of 3) have individual coverage.