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John Hancock exits long term care insurance sales
John Hancock Discontinues LTC Insurance Sales
One of the pioneers of long term care insurance announced today it is making the difficult decision to stop selling long term care insurance policies effective December 2, 2016. John Hancock has underwritten long term care insurance since 1987 and is the second largest underwriter of individual long term care insurance policies.
Since 2002, interest rates have declined to their current low levels placing increased pressure on capital reserve requirements.
The long term care insurance business is a very capital intensive business.
To offset the low interest rates, long term care insurance underwriters have been forced to underwrite higher priced policies compared to policies sold 15-20 years ago. The increase in higher LTC insurance premiums have decreased consumer demand for traditional long term care insurance policies.
This past April, John Hancock introduced a new policy called Performance LTC which was supposed to create interest and increase sales for John Hancock.
Performance LTC was marketed by John Hancock as a “unique” long term care insurance policy in that it offered an increasing premium rate structure. Within the Performance LTC policy was the possibility that John Hancock could declare premium credits tied to its claims history and future investment returns to offset the guaranteed future premium increases to policyholders. Among long term care insurance specialists, however, the John Hancock Performance LTC policy was not well received as a good consumer value. The guaranteed premium increases were stark, and consumers did not want to assume the risk of “hoping” for a credit. I personally felt John Hancock Performance LTC was not worth considering whatsoever.
So, 7 months after bringing its new idea to the marketplace, John Hancock has made the decision to get out.
John Hancock has analyzed the macro-economic trends.
Sales of traditional long term care insurance policies have been stagnant, while sales of hybrid long term care insurance policies (combination life/LTC, and annuity/LTC) are increasing dramatically.
As such, John Hancock will no longer sell individual long term care insurance policies.
John Hancock will continue to underwrite the Federal Employees Group LTC Insurance Program. For now.
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So,Jack, I presume JH will continue to a accept my premiums and deliver on the policy if i ever actually need it. Am I correct?
Hi Lyn, yes, John Hancock’s decision to no longer sell new long term care insurance policies does not impact its existing active policyholders at all.
Didn’t Mass Mutual exit the traditional LTCi market, or am I imagining things?
Yes, Chris, you are imagining things. Mass Mutual is still underwriting LTC insurance.
Hi Jack, I have been reading your blog for the last hour and it is extremely informative – thank you! I am a 57 year old female in excellent health and I am considering buying a hybrid LTC plan. My husband is 68 and has a LTC plan through his former employer. The monthly premium for his coverage is $79 for a lifetime maximum benefit of $346,750 and maximum nursing home monthly benefit of $5,800, with no inflation protection.
We have been told that his policy is very good and we should not change to a hybrid. However, I would like to buy hybrid LTC insurance for myself. I am looking to spend $75,000. My question is should I wait until I retire in 2-3 years and we move to Florida or buy it now while living in MA? We have a 2nd home in Florida but our official address is MA. Will my policy differ significantly based on Florida or MA residence? What is the best hybrid plan for me in each state?
Hi Susan, Lincoln Moneyguard II will be your best policy option today. Premiums/benefits are the same whether you reside in MA or FL. You should buy the policy today. Lincoln will be implementing a price adjustment early this year. Policies will be much more expensive for you in 2-3 years. Get in the door now before the adjustments. Please call me at (800) 891-5824 for customized proposals and advice. Thank you Susan.
Your blog is very informative, thank you! It seems like LTC plans would be a great thing that an employer might offer as an employee benefit. But upon researching this, it seems that most insurance companies have dropped group LTC insurance even though they might still sell individual LTC policies. Are there any companies that offer standard LTC plans at a discount through employers?
Hi Audrey. LifeSecure and Transamerica are the 2 long term care insurance underwriters that will issue group coverage with possible simplified underwriting issue. Should you wish to receive a group LTC insurance proposal please call me at (800) 891-5824. Thank you Audrey.
Thanks for your website. My husband and I purchased a single “joint” LTC policy from John Hancock about 11 years ago. Our benefits which either can use are: $180 daily; 10 years; 60 days elimination; and 5% compound. This costs us about $2500/yr. I’m 64 and he’s 67. We’re thinking about reducing our plan. Our options are: keeping the inflation compound for the daily benefit at 5% but reducing the policy limit to 3%; or keeping the 5% but reducing the benefit period to 4 or 6 years.
If we reduce from the 10 year benefit period to a 4 or 6 year, will we lose what we have been paying for with the 10 years, or with what we have already paid, will that be part of our “future bank”?
We considered stopping altogether but JH said that our plan has no cash value so we would lose our entire 11 year investment.
Hi Cece, I would highly advise you to keep your policy at current levels with 5% compound inflation protection. Your premium is relatively very inexpensive.
At the end of 2006, my wife and I purchased JH Group LTC with a 5% automatic benefit increase through my employer at the time (large public university in Texas). My wife was 62, and I was 63. In 2009, I increased her benefit amount and left mine the same. In 2013, we opted for a reduction in the automatic benefit increase to 3.2% in order keep the same total monthly premium, currently $430.50. My wife has a daily maximum nursing home benefit of $208.56, and mine is $153.28. I also have another group LTC policy With Unum through a prior employer with a fixed daily maximum nursing home benefit of $50.00 for a cost of $12.60 per month. I am in good health, but my wife has hypertension with related health issues. What is the likelihood of finding better coverage given our current ages of 73 and 74, respectively? I have been talking with an insurance agent for the Knights of Columbus recently.
Hi Ed, You will not find less expensive or better coverage. You purchased your policies 11 years ago. Now you are 11 years older. You might run into a hungry Knights of Columbus agent, however. Be careful. I would suggest you do not run into a mistake today. Thank you Ed.
My husband and I have John Hancock LTC and today just received notificaton of another optional increase. We have had LTC since 2009. My husband is 72 and I am 62. His premium is now $170.43 and will go to $206.47 (a 21% increase). Mine is currently at $146.74 and will go to $170.60 (an increase of 16%). These increases seem excessive but they indicate that it is necessary due to inflation and in order to maintain our benefits. Do you recommend that we accept these changes?
Hi Donna, These purchase options are not excessive. They are provided to you to give you an opportunity to buy additional coverage with no medical underwriting. Should you accept the increase in benefits, your premiums will be increased accordingly. Should you decline the increase in coverage, your benefits and premiums will remain where they are today. The future offers you will receive from John Hancock to increase your benefits will cost progressively more premium because their offers to you are based upon your age. So, if you want to buy more benefit, it will be less expensive for you to accept their offer today, then the forthcoming offers you will receive in later years. Thank you Donna.
Very informative reading so far. Thank you. Question- I am a 47 year old healthy female considering LTC insurance, living in FL but may return to NJ later in life, any suggestions?
My wife and I have LTC through J.Hancock, having purchased them as a joint policy 10 years ago. My wife is turning 60, and I just turned 67. I have a two year benefit period, and my wife has a 3 year. We have received notice our premiums will be going to $1623 and $1428, a 25% increase. They have offered to keep the present premiums if we agree to reduce our future annual inflation rate to 3.3% compound. Is this an acceptable tradeoff to keep our premiums at the present level?
Hi Craig, I would recommend keeping the 5% compound inflation protection on your policies. Certainly for your 60 year old wife. She might live another 30 years before needing long term care. Do not begin trading in your benefits too soon.
Hi Kelly, Buy your coverage sooner rather than later. Single female pricing is much better when you are healthy and obtain your policy while you are in your 40’s and 50’s. Benefits are portable from Florida to New Jersey. The cost of care is higher in New Jersey than in Florida, so keep New Jersey cost of living in mind when you structure your benefits.
I purchased a Group Long Term Care Policy through John Hancock through my employer over 30 years ago. I am now retired and continue to pay the premiums.
Do these policies have any cash value?
Do individual long-term care insurance policies have a cash value.
Hi Richard, Yes all hybrid combination long term care insurance policies, whether life insurance based or annuity based, will have cash value.
A few examples of excellent hybrid long term care insurance policies are OneAmerica Asset Care, OneAmerica Annuity Care, Lincoln Moneyguard, Securian SecureCare, and Pacific Life Premier Care.
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