Insurance Curator Boston — Insurers including Lincoln Financial and Brighthouse Financial have in the past two years rolled out redesigned “hybrid” life–long‑term care products and added features such as return‑of‑premium riders, indexed growth options and indemnity-style claim payments as companies respond to a fragile market for stand‑alone long‑term care (LTC) insurance and a wave of carriers retreating from mass‑market sales. The moves, industry analysts and regulators say, are driven by decades of underpricing and volatile claims experience in traditional LTC lines, heavy regulatory scrutiny of multi‑state rate increases, and shifting consumer demand for products that deliver value even if care is never needed. (businesswire.com)
What happened, and why it matters
- Who: Major U.S. life insurers and a shrinking universe of carriers that still underwrite LTC risk; policyholders who bought legacy stand‑alone LTC contracts; regulators at the state level and the National Association of Insurance Commissioners (NAIC). (us.milliman.com)
- What: A pronounced industry shift away from traditional stand‑alone LTC policies and toward “linked‑benefit” or hybrid products that combine a life insurance policy or annuity with an LTC rider, plus benefit redesigns meant to limit future rate‑increase exposure and make benefits more predictable. (limra.com)
- When: Product launches and redesigns have accelerated since 2023 and continued through 2024–2025 into early 2026, as insurers filed new hybrid products and announced enhancements to existing portfolios. Regulators have been revising multistate rate‑review rules over the same period. (businesswire.com)
- Where: The most active changes are in the United States — the locus of the largest private LTC market — though insurers in other advanced economies are also rethinking product design amid demographic pressures. (us.milliman.com)
- Why: Legacy pricing, persistency and morbidity assumptions for stand‑alone LTC failed to anticipate actual claim experience and policyholder behaviour; carriers faced mounting reserve shortfalls and sought rate increases that provoked litigation and regulatory pushback. Hybrid designs and benefit redesigns are insurers’ commercial and actuarial response: they reduce “use it or lose it” objections, offer death benefits if care is never required, and enable simpler pricing and distribution approaches. (us.milliman.com)
Industry pivots: product redesigns and examples
Insurers are improving flexibility and adding consumer protections while moving the commercial emphasis to asset‑based designs.
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Lincoln Financial in May 2024 rolled out an updated MoneyGuard Market Advantage product that gives customers more investment options, a choice between reimbursement and indemnity claim payment styles, and expanded distribution terms for advisors. Lincoln framed the product as a response to consumers preferring “growth over guarantees.” “As marketplace needs and preferences shift, Lincoln continues to demonstrate its commitment to meeting clients where they are,” Michael Hamilton, Lincoln vice president and head of MoneyGuard Business Management, said in the company release. (businesswire.com)
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Brighthouse Financial in July 2024 announced enhancements to its Brighthouse SmartCare policy — an indexed universal life contract with LTC acceleration features — adding a 3% compound growth option for LTC benefits and no‑cost return‑of‑premium riders that guarantee a minimum surrender or death benefit tied to premiums paid. “By offering both a guaranteed death benefit and guaranteed long‑term care protection, Brighthouse SmartCare can play an important role in a well‑rounded financial plan,” Myles Lambert, Brighthouse’s chief distribution and marketing officer, said. (businesswire.com)
Industry researchers and consultancies say these product changes are widespread. A 2025 Milliman industry projection and LIMRA/EY analyses describe a growing hybrid market and a decline in the addressable stand‑alone seller pool, with companies focusing new offerings on middle‑ and mass‑affluent segments and worksite or association distribution channels. “As the U.S. population ages, the market for hybrid life and LTCI policies has been growing,” Milliman analysts wrote in a March 2025 paper that also projected rising paid claim dollars over coming decades from the existing policy base. (us.milliman.com)
Why insurers left the mass market — and the fallout
For decades the traditional LTC market was undermined by three interacting pressures: aggressive early pricing and underwriting that underestimated long‑term claim costs; lower than expected policy lapse rates that kept beneficiaries in force far longer than modeled; and long‑term interest‑rate environments that eroded asset returns backing long‑duration liabilities.
Milliman’s projection noted the industry had gone from more than 100 sellers in the 1990s to “fewer than 15 carriers” still active in LTC as of the early 2020s, and it estimated roughly 6 million policies in force at year‑end 2023. Those legacy policies produce the bulk of current LTC claim dollars and have driven many of the market’s troubles. (us.milliman.com)
The commercial consequences were stark. Insurers sought multiyear, state‑by‑state premium increases to plug reserve shortfalls. Some large rate filings prompted litigation and public outrage. Genworth — long the largest seller of stand‑alone private LTC in the U.S. — has faced multiple lawsuits and regulatory battles tied to multiwave premium increases, and its annual filings show the company’s LTC reserves and profitability remain mission‑critical to its operations. Attorneys for policyholder classes have alleged inadequate disclosure about planned increases; one complaint said Genworth “relayed … only that it reserved the right to change premiums” while allegedly planning coordinated multiwave hikes. (ctmirror.org)
Regulators, meanwhile, moved to create a consistent multistate approach for reviewing rate actions. The NAIC adopted a Long‑Term Care Insurance Multistate Rate Review Framework in April 2022 and has continued to refine the framework and governance through 2024–2025, adopting the Minnesota approach as the single methodology and revising cost‑sharing rules to protect older policyholders who have already endured steep cumulative increases. State‑by‑state authority remains, but the NAIC’s work has reshaped the administrative and political context in which carriers seek approved rate actions. (sidley.com)
What hybrid designs attempt to solve — and their trade‑offs
Hybrid or “linked‑benefit” designs come in three broad families: life insurance with LTC riders (asset‑based life), annuities with LTC riders (long‑term care annuities), and single‑premium or limited‑pay products with return‑of‑premium or death‑benefit guarantees. Insurers and advisers say these designs address two central obstacles for buyers: affordability and the perception that premiums are “wasted” if the policyholder dies without needing care.
Product designers also wager that hybrid underwriting, usually tied to age and mortality risk rather than only to morbidity, can moderate adverse selection. LIMRA and EY industry studies show carriers increasingly offer indemnity payout styles (fixed monthly sums), indexed growth options and return‑of‑premium features — changes that broaden appeal but can add complexity in sales and regulation. “Consumer demand for LTC solutions is strong,” LIMRA reported, but “the number of carriers and products in the stand‑alone LTC market has declined, driving the shift to hybrid solutions.” (limra.com)
Trade‑offs are real. Hybrid policies often require higher up‑front premiums or lump‑sum payments compared with some employer‑sponsored group solutions. They may shift investment and longevity risk differently than a pure LTC contract. Some critics say product complexity can obscure effective comparisons and that riders and variable credits can mask true long‑term pricing sensitivity. Regulators’ recent edits to the NAIC framework — including new attention to cost‑sharing and benefit‑reduction approaches — reflect a policy effort to manage those trade‑offs. (datamatters.sidley.com)
Voices from inside the market
Industry executives frame product changes as consumer‑centric evolution. Lincoln’s Jared Nepa described MoneyGuard as “a forward‑thinking solution” that provides “flexibility” and tax advantages, and Brighthouse’s Myles Lambert said SmartCare enhancements help “protect clients from the costs of long‑term care.” At the same time, market watchers of independent brokerages, consultancies and actuaries highlight the structural problem that legacy insurers endured: improper initial assumptions about lapse behavior and the pace of claims. (businesswire.com)
Consumer advocates and plaintiff attorneys cast a different light. In litigation and public commentary, advocates argue that policyholders confronted sharply rising premiums and were not always given clear, actionable choices. Class action complaints against carriers such as Genworth allege failure to disclose the scope and timing of planned increases, a charge that has fed settlements and regulatory inquiries. “This material information about Genworth’s plan for (and need for) massive future rate increases … was never shared with Genworth’s policyholders,” one complaint said. (classaction.org)
Regulatory levers and the prospect of public policy responses
States remain the principal gatekeepers for premium increases, and the NAIC’s multistate process is intended to harmonize actuarial review and reduce cross‑state subsidy problems. Recent NAIC deliberations through 2024–2025 narrowed review methodologies and sent cost‑sharing formulas back to working groups for revision, reflecting continuing political and technical contestation. Sidley Austin and other regulatory analysts say the changes aim to balance insurer solvency needs with consumer protection for policyholders who have already faced successive hikes. (sidley.com)
Policymakers have also considered broader options: state‑run or public‑private LTC programs, subsidies for in‑home care, or mandatory nonforfeiture features. Those proposals appear politically fraught and fiscally costly; the industry’s adaptation through product redesigns has been, so far, the immediate commercial answer. (us.milliman.com)
Who is protected — and who is not
The changes benefit future buyers and some existing policyholders who can access new options through conversions or special election programs that accompanied settlements in past litigation. But millions of in‑force legacy policyholders still face uncertainty. Milliman’s projection warned that paid claims from the existing portfolio will increase for decades, peaking in the 2030s and 2040s absent major market shifts. That enduring claims load constrains carriers’ ability to underwrite aggressively for new mass‑market business without reinsurance and careful pricing. (us.milliman.com)
The commercial calculus: distribution, capital and reinsurance
Insurers also changed distribution strategies. Hybrid products are often sold through fee‑based advisors, broker‑dealers and workplace channels where suitability and tax treatment can be better explained. Carriers have used reinsurance and portfolio transfers to manage legacy blocks; some insurers that exited front‑line mass sales in prior years now reenter with tightly defined product forms or through third‑party administrators. Milliman, LIMRA and other consultancies note that new filings in 2025 came from firms that previously reduced direct LTC sales, suggesting a cautious re‑entry enabled by modernized product design and capital management. (us.milliman.com)
What consumers should watch for
Consumers who own legacy stand‑alone LTC policies should be vigilant for state regulatory notices, settlement election letters, and rate‑increase filings affecting their policies; attorneys and consumer groups advise policyholders not to cancel older policies without a careful financial evaluation. For buyers evaluating hybrid offers, key considerations include the product’s claim‑payment style (indemnity vs. reimbursement), inflation protection mechanics (fixed compound versus indexed), the availability of return‑of‑premium or paid‑up options, tax treatment, and the financial strength and claims‑paying record of the insurer. Industry trade groups and independent advisors urge plain‑language disclosure and side‑by‑side comparisons to help consumers choose. (businesswire.com)
Outlook: stabilization or new fragility?
The industry’s pivot to hybrid products, revamped benefit designs and renewed regulatory dialogue have eased some immediate commercial pressures: hybrid designs eliminate the “all‑or‑nothing” objection and provide insurers clearer asset–liability matching. Yet the underlying actuarial challenge — projecting morbidity, persistency and longevity decades into the future — remains. Milliman’s projection and regulators’ work on multistate rate review suggest the market faces years of elevated claim costs even as new sales of hybrid solutions expand. “We forecast an increase in LTCI paid claims through about 2041,” Milliman concluded, stressing that the projection assumed no new sales and therefore does not capture future market evolution. (us.milliman.com)
As insurers press further into hybrid designs, two dynamics will determine how far those products resolve the sector’s stress: the industry’s ability to price and underwrite using improved data and analytics, and regulators’ capacity to strike a durable balance between insurer solvency and consumer protection. If either falters, policyholders — especially those with legacy contracts — could again find themselves at the center of contentious rate disputes or litigation.
— Reporting from Boston and New York. Sources include Milliman, Lincoln Financial Group, Brighthouse Financial, LIMRA/EY industry research, NAIC regulatory materials and public company filings and litigation records. (us.milliman.com)