The good news is that we are living a lot longer, but as we age, the expenses of not being able to take care of ourselves increases dramatically. John Hancock is now dealing with having to pay out $1.5 million in benefits daily for those with their Long Term Care (LTC) coverage.
John Hancock currently has 47,000 customers that have incurred claims of over $3 billion total. This would be roughly $64,000 in claims per customer that has filed so far. They have over 1.2 million customers covered under individual, group, and the federal program.
To cope with these staggering claims, John Hancock will be raising premiums for existing customers 40% for their Long Term Care policies, and will suspend sales for their group policies. This comes after increasing their federal long term care group premiums last year by 25%. Realizing this increase in premiums could be unaffordable for many customers, they are offering other options such as a reduction of benefits to help customers keep their premiums the same (or level). In addition they will also be reducing daily benefit amounts, payout periods, and inflation riders to keep customers premiums, and the companies’ risk exposure, down to a level that is manageable.
The average annual cost of Long Term Care insurance in 2007 was $2,207, however based on the customer’s age, the premiums can vary quite a bit. In the 70 and older bracket, this could lead to premiums in the $4,200 range, being an average increase of $100 a month.
There’s a lot more to the story though. Currently, 40% of those requiring Long Term Care services are 18-64 years old, and it’s estimated that 70% of those over 65 will require some form of Long Term Care in their lifetime.
Regarding John Hancock specifically, since 2006 when their last thorough audit was conducted, they have experienced double the total amount claims, and in the 80 and older block of business, claims have quadrupled. The severity and duration of claims now versus in 2006 are a lot higher as well.
This brings up two different extremely important situations. If you are in the market to purchase Long Term Care insurance, and you see that one company just increased their rates, how long is it until the other companies might follow suit?
The WilmingtonInsuranceQuotes.com Team has multiple companies that offer full benefits, long payouts, and inflation riders, and some that offer limited benefits without inflation riders. Owner/Operator Phil Roesel believes that some of the simpler policies, that have payouts maxed at a year instead of lifetime and daily defined limits without inflation riders, should be able to more accurately predict their claims experience. It is with that understanding that we can predict their premiums should stay more level than a plan with all of the “bells and whistles”.
We primarily use Genworth and Mutual of Omaha for our comprehensive Long Term Care insurance providers, and have companies like Equitable that offers simpler plans if that would better suit your needs. Fill out our Contact Form for free quotes on Long Term Care, or call Phil Roesel directly at 910-228-8352 today!
Some Information Courtesy of: LongTermCare.gov