Premiums have skyrocketed for a long-term care plan operated by a Manulife subsidiary
An article from the Philadelphia Inquirer reports that Manulife’s U.S. subsidiary John Hancock has increased premiums for its Federal Long-term Care Insurance Program by between 26% and 118% this year.
“Unfortunately, analysis of the Federal Long Term Care Insurance Program (FLTCIP), using updated assumptions based on identified trends and actual claims experience, indicated that the FLTCIP premiums were not sufficient to meet the program's future, projected claims costs,” explains the official FLTCIP site. “As a result, there was a need to increase premiums.”
For an unnamed retired systems analyst who worked at the Philadelphia Naval Shipyard, his premium went from US$118 per month to US$260 per month. “I can stay at $118, but with the benefit reduced to $200,000,” said the man. “I guess the actuaries got drunk when they gave us the first rate and worked it all out on the back of a napkin.”
Apart from updated trends and claims data, program managers also point a finger at U.S. monetary policy: “The historically low interest rates of recent years have reduced investment income and future projected investment returns, which do have an impact on premiums, along with our revised view of future, projected claims and mortality rates,” says the program website.
Bucks County retiree Jack Murphy also voiced concerns. “My wife and I have long-term care with John Hancock, who raised our rates by 20% this year, and stated in the letter they are filing for a second increase that put the total monthly cost 45% higher,” Murphy said. “They had a bad business model and we must now pay for their mistake.”
He is not taking the situation lying down, however. Soured by this experience with the federal plan, Murphy is shopping for new insurance. “I would recommend everyone to review quotes for their insurance needs every three years,” he said.
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“Unfortunately, analysis of the Federal Long Term Care Insurance Program (FLTCIP), using updated assumptions based on identified trends and actual claims experience, indicated that the FLTCIP premiums were not sufficient to meet the program's future, projected claims costs,” explains the official FLTCIP site. “As a result, there was a need to increase premiums.”
For an unnamed retired systems analyst who worked at the Philadelphia Naval Shipyard, his premium went from US$118 per month to US$260 per month. “I can stay at $118, but with the benefit reduced to $200,000,” said the man. “I guess the actuaries got drunk when they gave us the first rate and worked it all out on the back of a napkin.”
Apart from updated trends and claims data, program managers also point a finger at U.S. monetary policy: “The historically low interest rates of recent years have reduced investment income and future projected investment returns, which do have an impact on premiums, along with our revised view of future, projected claims and mortality rates,” says the program website.
Bucks County retiree Jack Murphy also voiced concerns. “My wife and I have long-term care with John Hancock, who raised our rates by 20% this year, and stated in the letter they are filing for a second increase that put the total monthly cost 45% higher,” Murphy said. “They had a bad business model and we must now pay for their mistake.”
He is not taking the situation lying down, however. Soured by this experience with the federal plan, Murphy is shopping for new insurance. “I would recommend everyone to review quotes for their insurance needs every three years,” he said.
Related stories:
Life insurance needs to become more attractive to consumers, says Manulife executive
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