Long Term Care Ins — Companies Need to be Audited!
Having read your article advising policy holders burdened by the up to 126% increases in premiums I am confused by your recommendation to trust this company with any more of our money. You state that John Hancock ..." Vastly underestimated the potential cost of care, policy usage, impact of increasing longevity and possibility of today's lower interest rates." Basically they did not put any forethought into what it would mean to be a Long Term Care Insurance company. ie projecting increasing cost ( inflation for which they did have the fore sight to offer me the option to pay for). They seriously did not think people paying for this coverage would use it!? So they would just collect the premiums and not have to pay out? Increased longevity was the reason these long term care plans were created. If this company did not have the fore site or acumen to manage the policy premiums what the heck were they doing signing people up for these policies? It would be interesting to know the figure for how many people died and never used any of the funds they had paid into these policies. On a micro scale, I for one paid them $50,000.00 over 8 years for my husband who died without ever using one penny of those funds. They also have $55,000.00 of my money and, thank God, at 69 years old I seem to be very healthy, like many, many of my piers. So I would like to see an audit of this company before they are allowed to take any more money from the policy holders.If the federal government wasn't the one vetting this company I would wonder if it was one big scam from the beginning. I await your response. Sincerely Linda
Terry Says
I understand -- and share - your frustration. When the premium increases started happening a few years ago (before they got around to the Federal program, they raised individual premiums) I had smoke coming out of my ears! I contacted the companies, talked with the CEOs of two of the major companies. I talked to the state insurance regulators who had to grant the increases. You are correct! These huge insurance companies admit to "mis-pricing" these policies! It is unthinkable! But they have convinced the regulators that to stay solvent they must raise premium prices! It's done. We can't do anything but figure out how best to deal with it -- either by cutting our promised inflation adjustments, or shortening the period of coverage. BUT, if we drop policies, THEY WIN -- getting to keep all the previous premiums with no future liability for service. And, yes, with traditional LTC policies you face that potential -- that you will die without every using the benefits. I paid for policies for both my father and mother. My mother passed away without ever using her policy. BUT, my father is now 95 years old -- and has been using his policy for care for about 6 hours every day! I am so grateful, because that is a huge expense. You never know what is in store for you --so don't give up your policy!! These days there is a different kind of policy being offered -- a combo between life and LTC benefits. So if you don't use the LTC benefit, your heirs get a death benefit. Check out my recent article on these"combo policies." But these weren't available when you and I purchased policies. As for an "audit" -- first let's get an audit of the U.S. Government to see how they are going to pay our promised Social Security and Medicare benefits! (At least, they can "print" the money!)
