No. of Recommendations: 3
Wendy wrote: I am concerned about the long-term viability of the insurance companies. I am afraid that they will go bankrupt just as most of their customers need them most.

Wendy, I am also concerned about the financial future of the insurance companies. Like other investors, they are stuck dealing with the prospects of low returns for both equities and fixed income.

In the specific case of LTCI, the companies do have some ability to raise rates. There was an uproar the last few years are rates went up. That was also when several companies stopped “writing” new business. Note that they still had to provide coverage for the folks that had already signed up. There are some limits on how much they can raise rates to existing policy holders from what I understand.

Long term, I have confidence the companies will raise their rates enough to sustain themselves. Overall, they are a prudently run industry. They are not out there swinging for the fences or putting on high risk trades with their investment portfolios.

Of all the financial risks to lose sleep over, I would not put this one in the top ten.


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