Longer-than-expected lives and lower-than-anticipated interest rates are to be celebrated, but these positive signs of modern life have put a squeeze on a safety net that hundreds of thousands of older Americans rely on.Faulty assumptions about both aging and interest rates have led a growing number of insurers to stop selling what is known as long-term care insurance. This product helps people cover the often staggering cost of nursing homes, home-health aides and assisted-living care.

The latest to leave the market is Prudential Financial. The Newark-based insurer announced this month that it will stop selling long-term care policies to individuals, focusing instead on group plans sold through employers and affinity groups.

Prudential’s move follows another major provider, Unum Group, which said last month it no longer will sell group policies. MetLife, the country’s largest life insurer, called it quits on selling long-term care policies in 2010. The three companies comprise about 30 percent of New Jersey’s $301.6 million long-term care market, according to the latest data from the National Association of Insurance Commissioners.

Insurance brokers, advisers and health advocates expect other carriers will leave the field, too. A loss of competition in turn will lead to higher prices for policies, they feel.

"It’s only going to get worse for the consumer," said Michael Papa, founder of Diversified Planning Strategies of Caldwell, who says about 35 percent of his largely retiree clientele see their applications for long-term care policies rejected.

Insurers are leaving the market even after winning double-digit rate increases for long-term policies, tightening underwriting standards and screening prospective customers earlier for signs of chronic illness and dementia that later lead to claims. The state Department of Banking and Insurance, for example, allowed MetLife to raise rates on its most common policy by 20.5 percent in November, and approved Unum’s January request to raise rates by 12.8 percent. Prudential’s last rate increase, of 14 percent, was granted in December 2009.

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