Two insurance units of Penn Treaty American Corporation – Penn Treaty Network America Insurance and American Network Insurance – are on track to be liquidated early next year due to excessive liabilities. According to The Wall Street Journal, the liquidation of the two insurance units with assets of about $600 million and projected long term claim liabilities topping $4 billion is likely to be the second largest in U.S. history. The underlying cause of the liquidation is due actuaries badly underestimating costs as policyholders lived longer than expected, had higher than anticipated medical costs and did not allow their policies to lapse at the anticipated rate.
Despite the collapse of Penn Treaty’s Long Term Care Insurance units, the need to protect your assets from long term care costs remains ever so important. Fortunately, there are a few companies still offering long term care insurance. Also, hybrid policies in which life insurance or annuities are sold with riders for long term care benefits are becoming increasingly popular. With long term care costs representing the greatest threat to a person’s retirement savings, see an experienced elder law attorney for how best to protect your estate and loved ones.