Looking to learn if anyone has experience with john hancock and their long term care packages and rate increases in the state of wisconsin. Just curious as a gentleman I spoke with from northwest mutual life indicated they haves raised rates across several products throughout the past few years. Although he ranks John Hancock second to them, he states that they have never raised their premiums on their customers in the long term macro product side.

Duhas,
Hancock filed for a 13% rate increase in May, 2008 on their Advantage Gold & Advantage Select products.

Not sure if every state has had an increase.

Arthur

HYPOTHETICAL QUESTION:

Is it better to pay $2,000 per year for a long-term care insurance policy issued by an insurer that has been selling LTCi for 22 years and has had one 13% rate increase on about half of their LTCi policyholders

-OR-

pay $3,000 per year for a comparable long-term care insurance policy issued by an insurer that has been selling LTCi for 12 years and has never raised their rates on their LTCi policyholders?



In this hypothetical case, I think I'd choose the policy that is $1,000 less per year and "risk" a 13% ($260) increase. Even if there was a 50% rate increase 10 years from now, I'd still be ahead of the game because I would have saved $1,000 per year for the first 10 years.

Hypothetically speaking,

Scott A. Olson
Redlands, CA

Scott:

well put, hypothetically of course

When I have run into clients that have spoken to NWM, it seems like all the NMW agents use the same pitch, which is basically that "everyone else is in financial difficulty......and when the dust settles only NWM will be left standing....and of course, we've never raised our rates.....and, oh by the way, we pay dividends as a mutual company....so therefore you only buy LTC from us". of course there is the "and we want your 401K and permanent life insurance business too".

Their products appear terribly overpriced compared to the major LTC players out there, and they are not really a major player in the field in terms of number policies sold. So, how else can they sell their products without the approach above?

Yankee,
Good point but I think you have the process backward.

NWM & Mass Mutual (to name 2) generally sell LTC policies to those who are already clients with the company. Their first sale is not LTCi. They deal with hi net-worth individuals and already have their clients 401k's and other investments in hand.

They pretty much have a captive audience and their clients will buy a LTC policy from them without a reason to shop around.

Although Mass Mutaul has become a little more competitive over the past couple of years, NWM is usually substantially higher than other carriers.
Arthur

I think the NWM agent's statement has the implied "yet" in there. We used to say that Genworth had never raised rates, they did. Allianz had never raised rates - they are. Not to knock anyobdy, but only being in the industry 12 years, they don't have alot of experience behind them. I know they are a solid company, with a decent product, but they just don't have the book yet to know if they got it right. Knowing what we know now, I think any responsible agents has to say, these premiums can, and probably will go up at least once. Its just buying with a company that is respinsible to minimize the increase.

When you fill out a NWM LTC application, the state required suitability forms will be included that ask " Would you be able to afford the premiums if they increased by 20%?" They do not get to avoid the forms just because they charge so much to start with that they may in fact never need to raise their rates. I wonder what the NWM agent says at that point.....besides "not yet".

That is true...as I would think a NWM agent might starve if their sole purpose in life was to find LTC business. Sometimes I will even purposely quote a NWM plan for clients who get hung up on Clark Howard's LTC honor role, just to show them what a good deal John Hancock(for example) is by comparison.

Trubi,
"Allianz had never raised rates - they are"

What do you know about Allianz raising their rates?
Arthur

NWM may have never raised rates, but I'm also guessing that they've paid very few claims. Once they begin to build a real claims block, it wouldn't surprise me to see their dividends on the LTC business vanish, and the potential for rate increases will follow.

Allianz filed for a 25% rate increase on all business sold up to 2004. I don't recall the exact date, but it was announced about 1-2 months before the exited the market. It is still being approved by the states, but it is filed.

I wasn't aware of that. NY is not effected because Allianz didn't enter the NY market until after 2004.
Thanks,
Arthur