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Featured Advisor

Srbo Radisavljevic
Managing Principal/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, following Chicago sports, enjoying ethnic cooking, and serving as a school board member for Norridge School District 80.

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Prudential Exits Individual LTC Market

Prudential follows MetLife out of the individual LTC market, leaving shrinking options for consumers seeking long-term care.

| BY Adriana Reyneri


Prudential Group Insurance has become the second major U.S. insurer to exit the individual long-term care market to focus solely on group LTC insurance.

“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 where we see the greatest opportunity,” said Malcolm Cheung, vice president of Long Term Care for Prudential Group Insurance, in a prepare statement issued earlier this week. The company also announced it will honor existing policies.

Prudential is following Metlife, the nation’s largest life insurance company, which announced last fall that it would discontinue sales of new long-term care policies. Like Prudential, MetLife said the decision was in response to “financial challenges” in the LTC business, according to news reports. The challenges include hedging against the rapidly rising cost of long-term care and difficulty estimating the extent of long-term care usage in the coming decades, according to industry analysts.

Increases in long-term care costs are outpacing the general medical inflation rate, said Sandra Timmermann, head of the MetLife Mature Market Institute. “The state of the economy, combined with rising health care and energy costs, are having a significant impact on long-term care rates,” said Timmermann.

National average rates for a private nursing home room increased 4.4 percent to $239 daily or $87,235 annually in 2011, according to a study from the MetLife Mature Market Institute. Adult day services rose by 4.5 percent to $70 a day, and assisted living base rates rose by 5.6 percent to $3,477 monthly or $41,724 annually.

“As the cost of care continues to rise, Americans need to discuss long-term care planning with their families now, to ensure they receive the kind of care they want in the future,” said Timmermann. “This is especially critical at a time when retirement savings rates are low.”

Added to this unfavorable scenario are shrinking options for American insurers seeking LTC coverage as the nation’s two largest insurers exit the market. The American Association for Long-Term Care Insurance or AALICI, provides a ratings service for long-term care insurance provides and advises consumers, “When purchasing long-term care insurance protection, it is important to make certain that the insurance company you select is both committed to the marketplace as well as being financially sound.”

The National Association of Insurance Commissioners or NAIC explains the decision to buy LTC insurances depends on an individual’s age, health status, overall retirement goals, income and assets. “Many people buy a policy because they want to stay independent of government aid or the help of family,” said the NAIC in a consumer advisory. “However, you should not buy a policy if you can’t afford the premium or aren’t sure you can pay the premium for the rest of your life.”

Individual policies can be very different from one company to the next, warns the NAIC, explaining, “Each company may also offer policies with different combinations of benefits. Be sure to comparison shop among policies, companies and agents to get the coverage that best fits.”

The majority of high net worth investors – those with investable assets of $5 million to $25 million – forego LTC insurance, according to a fourth quarter study by Millionaire Corner on financial product usage. Only 36 percent of the high net worth has LTC insurance and that share drops to 28 percent for non-millionaires with investable assets ranging from $100,000 up to $1 million.