Getting long-term care insurance for future nursing home expenses can be exceedingly difficult and expensive. A recent announcement by GE helps to explain why.
Nursing home costs continue to increase, as more and more people need the facilities for longer and longer periods of time. This is the result of an aging population with increasing lifespans and medical science's ability to keep elderly people alive longer, even when they are very ill.
People do not have many options to pay for their nursing home care. The government will pay for it, if all other assets of the patient have been depleted. That means that people have to pay for it themselves in most cases.
It is possible to purchase long-term care insurance to cover the costs. However, it is very expensive and there are few providers.
The reasons for that, are partially explained by what happened to GE as Bloomberg reports in "GE CEO Renews Pledge to Study Breakup After $6.2 Billion Stumble."{: target="_blank"}
GE used to be in the insurance business. However, the company was never particularly good at it. Insurance is never something for which GE was known. The company got out of the insurance industry, but it never found a buyer for its long-term care insurance portfolio.
In the process of selling the policies, the company had greatly underestimated the future costs and the number of policy-holders who would make claims. GE has estimated that these old liabilities will result in the need to pay $6.2 billion, for which it had not planned.
That is why it is difficult and expensive to get long-term care insurance. It is very difficult for insurers to estimate future claims.
Reference: Bloomberg (Jan. 16, 2018) "GE CEO Renews Pledge to Study Breakup After $6.2 Billion Stumble."{: target="_blank"}