Friday, October 16, 2015

Shocking Revelations Why People Drop Long Term Care Insurance Coverage

Long term care is a pressing need among senior citizen nowadays, which is considered as a big financial blow. However, only a handful of people managed to purchase insurance for long term care.  To make things worse, more than 1/3 of policyholders let their policies lapse and forfeit their benefits.  It is shocking and alarming at the same time. So what are the reasons behind this?

According to the study conducted by Center for Retirement Research, there are three reasons why policyholders drop their long term care coverage.

First, is the way people perceive premium. Most people see it as a financial burden rather as an investment. And these people fall into the category called “Financial Lapsers.”

The second reason is this; people let their policy lapse as a strategy. Policyholders who remain healthy believe that their risk of requiring any form of long term care has decreased. Thus, they no longer see the purpose of keeping their policy. The study refers to these people as “Strategic Lapsers.”

Last but not the least is due to unplanned lapses brought about by cognitive impairment. These “Forgetful Lapsers” fail to pay their premiums due to their impairment and lose their benefits despite the fact that they will most likely need care.

The results of this study are surprising and enlightening at the same time. People with limited funds will most likely drop their long term care insurance. There are no evidence proving that “Strategic Lapsers” exist. Lastly, the study reveals that policy lapses are common among people with cognitive impairment.

This only shows that a lot of people who drop their long term care insurance are the ones who are in dire need of coverage.  People can avoid this scenario by planning accordingly and asking the help of their loved ones.

If you need help when it comes to planning for your future long term care needs, offers a free tool that can give you the most relevant information today. Try our free tool now:

Original article can be found here.


  1. Unfortunately, the study done by the Center for Retirement Research (CRR) uses old data. Their study only looked at people who may have owned LTC insurance 13 years ago (way back in 2002). And their sample size was very small--about 124 people who may have lapsed their LTC insurance sometime between 2003 and 2006.

    The biggest flaw, however, is that CRR’s brief did not mention the federal law that protects seniors from losing their long-term care coverage. The policies they studied were not protected by this law. Due partly to this federal law, the percentage of seniors that lapse their LTC insurance each year has dropped by 68% since the year 2000.

    You can read more about it here:

  2. Thank you for sharing your insights Scott and for providing answers to questions raised about the new study done by CRR. This can help educate my readers and somehow influence them on what course of action to take with regards to their long term care policy. Thanks again for sharing. Keep up the good work!