For three decades, insurers sold millions of affordable, comprehensive, and value-packed Long Term Care insurance policies. They promised dignity, financial protection, and peace of mind in old age. From a legal standpoint, policy contracts were unusually favorable for consumers. Most of all, they promised certainty. 

Executive leaders were rewarded for high sales, all the while knowing they would most likely not be around decades later when policyholders made claims. In other words, they knew they wouldn't be personally held responsible if their bets against policyholders weren't any good. By the time sales peaked in the early-2000's, nearly 200 private insurers sold policies. These later became known as legacy or traditional policies. 

By the mid-2000's, hundreds of thousands of aging policyholders were making new claims. This coincided with revealations of widespread financial mismanagment within the LTC insurance industry, rivaled only by the likes of Enron and Wordcom. The industry crumbled and a mass market exodus ensued. By 2012, only 15 insurers sold LTC insurance policies. Of those 15, none sold the same policies that they did earlier. The new policies are much more expensive and offer a mere fraction of the coverage.  When it comes to standalone policies, they just don't make them like they used to.

A basic economic tension will always exist between an insurer and its policyholder. Whats very good for the policyholder is generally not very good for the insurer, and vice-versa. The LTC insurance industry is the ultimate example of the pendulum swinging far in favor of the policyholder as a result of overzealous and irresponsible corporate leadership. Nonetheless, the industry's contractual obligations remain. LTC insurance is now the bad bet insurers can't shake.

Because they've lost all incentive to provide good customer service, LTC insurers actively attempt to prevent their policyholders from collecting the full value they're entitled to. Look no further than the Better Business Bureau to find that most of the insurers have failed out.

Claims handling is largly outsourced to reimbursement minimization call centers. If you remember the scandals behind payday lenders and subprime mortgage servicers, this is their more sophisticated, smooth-talking cousin. They're tasked with a simple, narrow mission:

1) Do not advise policyholders on how to get maximum reimbursement (including retroactive benefits or prevention of out-of-pocket costs during elimination periods);

2) Scrutinize every claim for the slightest opportunity to deny coverage;

3) Delay claims that are likely to be approved;

4) Under-reimburse approved claims and prey on policyholders' inability to meaningfully excercise their rights;

5) Aggresively pursue any opportunity to cancel or reduce payments;

6) Repeat steps 1-5 and wait for the policyholder to give up.