Hello all-

Last week I received a letter from John Hancock notifying me of another premium increase in my policy. This premium increase is 23%. This will be the third straight year of premium increases.

In this letter, they have given me an option to not have this 23% increase, but I would have to reduce my future annual inflation rate from 5% to 3.9%.

Here are some details about my current plan:

Monthly benefit- approx $5000
Benefit period- 3 years
Elimination period- 90 days
Inflation Option - 5% (currently)
Optional Riders - none

Premium increase approximately $350 annually

Any thoughts about this? Thanks.

If you can't handle the premium increase, drop the inflation to 3.9 and leave all else alone. IMO.

3.9% inflation? Never heard of that option.....

If you're at 5% Compound, you might want to look at 5% Simple Inflation.
Arthur

John Hancock has never increased their premiums on any of their LTCi policyholders three times. That's just not true.

Some of their LTCi policyholders have had two premium increases. Most of those policies are are over 10 years old.

But, none of their LTCi policyholders have had 3 premium increases.

So Scott, do you think chrob61 is a plant to discredit Hancock? I agree with Art, I've never heard of 3.9% inflation, but I learn something new everyday it seems lately.

The 3.9% is correct.

Some John Hancock LTCi policyholders are having a premium increase. Most of those are being given the option to keep their premiums level if they reduce their inflation benefit growth from 5% to 3.9%.

OK. So I stick with my original answer. Thanks Scott.

Hancock did offer this as a pretty unique way to avoid a price increase on this recent round of rate increases. My understanding is that the 3.9% kicks in from the date of the increase forward, so they keep whatever their 5% compound rider had increased the benefit to, and then that grows at 3.9% compound moving forward. All in all, that's a pretty decent approach. The amount of the "new" inflation rider varies by state and filing, apparently.

Thanks for all the replies-

First off, a little background on myself....I am 49 years old, am single, and was advised 2 years ago that if I can afford the premiums, it would be a good idea to look into LTCI.

So, when I was 47, I did all the scrupulous homework and got several quotes. I went for John Hancock.

Year 1 premium was approx $1400
Year 2 premium was approx $1550
Year 3 premium is going to be approx $1920

So, in response that my statement wasn't true about premium increases 3 times, that is correct. It has only increased 2 times.

So I am here on year 3 of having this policy, and each year has had an increase. So I guess it's just up to me if I want to pay the increase or have a reduced inflation percentage. I am not making this up, I have the letter from John Hancock in my hand.

I also am guessing the inflation rate varies by state, and in this letter I got from JH, they indicated the actual inflation is based on their studies from the state of Michigan.

chrob61,
Check your Policy Schedule Page (page 2 or 3) and let me know the following:

1) What was the exact benefit you selected and was it a monthly or daily benefit?
2) Your 5% inflation rider; is it 5% compound or 5% Simple?
3) Confirm that you were 47 when you purchased the policy.
4) What was your health class; Preferred or Select?
5) Have there been any health changes since your policy was purchased?
6) What will your new premium be if you stayed with your present benefits?

It's possible, even though you're 2 years older, there may be another policy out there that could give you the same benefits that you have now, at a lower premium.

Arthur

Scott,
I'm assuming that other options to maintain premium are also available?
eg: lower daily benefit, lower benefit period and for those with a 5% compound to go to 5% Simple?

Arthur

The policy series you have has NOT had 2 premium increases.
It has had only one premium increase.

The only premium increase is the letter you recently received explaining that you can reduce the inflation benefit to 3.9% and keep your premiums the same or increase your premium by about 23% and keep the 5% inflation benefit.

If you pull out your policy and look at the "Policy Schedule", you'll see that your premium was $1,550 from the very first year.

There are two possibilities of why you may be thinking that your first year's premium was $1,400.

Maybe you were quoted $1,400 by the agent, but the policy was approved with the $1,550 premium (that would be the difference between "preferred" rates and "select" rates.)

Or

Maybe you were quoted $1,550 by the agent and you paid a $150 deposit with the application. (John Hancock has always required at least one month's premium deposit with every application.) If that was the case, you would have paid the $150 deposit with the application and then, upon receipt of the policy, paid the remaining $1,400. In reviewing your check register, you may have seen the $1,400 payment and assumed that that was the original premium.

If you pull out your policy and look at your "Policy Schedule" (it's probably page 3 of your policy), you'll be able to find your annual premium either in the top right hand corner of the page or the bottom left half of the page.

When you do that you'll see that your premium was the same for year one and year two and that this is the only premium increase that they have made on your policy.

There are some John Hancock policies that have had two premium increases--yours is not one of them. Most of the JH policies that have had two premiums increases are between 10 and 15 years old.


sao

Yes. Other options are available to reduce the premium and/or avoid the premium increase.

In most states, decreasing the inflation benefit from 5% to 3.9% applies whether or not the inflation benefit is compound or simple.

If it was 5% compound, they can reduce it to 3.9% compound and keep their premium the same.

If it was 5% simple, they can reduce it to 3.9% simple and keep their premium the same.

And, from what I've heard, the new inflation growth applies to the growth going forward only. It does NOT reduce the 5% inflation growth that has already accrued in the policy.


sao

To answer the question about premium increases:

And to repeat what I have already typed....

The first year, my premium was about $1400, like $1407. I paid no down payment or deposit to the broker.

The next year, my premium was about $1550
To me, this is increase number 1

So, if I don't reduce my inflation coverage, then, I will get increase number 2. I have had the policy for 3 years now. There is a disclaimer that indicates that even if I take the reduced inflation, Hancock reserves the right to increase my premium at a future date.

Arthur, I will check my pg 2 and 3 and report back what I find.

Hancock takes no applications that I know of without 1 month minimum deposit with the application....or they send the application back (at least here in Georgia).

Something is fishy with the story here IMHO....but I have no dog in this fight.