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Wow, sounds like a desperation play by the insurance company. Alarms and red lights must be flashing for the LTC investment portfolio that backs these policies.
Not necessarily. A lot of folks can’t afford or react strongly to the premium increases. This is rather generous by John Hancock to let you get the money paid back and the get any ROI on the money. They could let folks just default and lose all they put in.
We had a rate increase last year with options and just accepted the rate increase and did so gladly.
We want them to stay afloat and they need increases to do that.
Next semi annual bill will be coming in a week or so if there is an increase so be it. The coverage is awesome and if we never need it, it means we skipped the nursing home stage. If we use the in home benefits that will be ok.
most policies are inflation adjusted or 20 years out they are not going to be much good . so rate increases to go with increasing payments for care go hand in hand
I'd be concerned about this offer and I'm not sure why the company would offer it. Think about the population that bought these policies. Which ones are going to take the buyout- the healthy, active ones who are traveling America in their campers or the ones who are starting to slow down, who have Alzheimer's in the family history, who have had a limb amputated due to complications of diabetes? The company will likely be left with a population MORE likely to enter LTC soon. Wonder what will happen to the rates then.
And I agree with an earlier poster that you need to check the tax consequences. If you were able to deduct LTC premiums on your state or local taxes, you may have to pay taxes on the refund.
My plan was purchased through my employer and was offered to people in CalPERS (CA state pension plan). About 5 years into my payments (2008ish?) they had a huge rate increase when they realized that their actuarial data was WAY off, and the economy had killed stock market returns on the invested funds. Once we swallowed that pill, they set a 3 year minimum time between rate increases, and a max increase per 3 year period of 5%. I didn't like it, because that's not what we were sold. Originally we were told that our rates would be locked in, so buying young was supposed to be to our advantage. In the end, it's still not awful, I still pay less than $200/ month now. It was just over $100/ month when I started, but it will probably be a long time (I hope) and a lot of premiums before I need it.
You never know when you might need nursing home care
Some people have strokes at younger age than normal and can’t make recovery
Some people are in car accidents
One person in my local area was bitten by mosquito that gave him Nile virus and had neurological complications—needs home health and was too young for Medicare—was working, lost job, etc...
The point for me is that a LTC policy is not only for people who are old—
If there was a decent national insurance plan people wouldn’t have to plan for debilitating illnesse
And nursing home care needs to be part of the national health care debate
I agree with the above poster. LTC is really of the most benefit in your plan when you are young to help insure that the assets are still there as you age.
I would keep the policy. As you said you likely cannot replace it.
For those regretting buying when they are young I submit the following. When you are young is when a need for LTC can wipe out your finances, particularity hurting your spouse in their old age. A car accident, a fall off a ladder, a skiing accident can put someone into needing nursing care at a young age, when they are not likely to pass away, but linger on for a long time. That is why we bought our LTC early and continue to pay the premium increases (which haven't been that bad for us).
Also as you age you there is a good chance you will find they won't sell it to you if you've shown any reason for them to think you might need it. Increased weight is one precluding factor. A bad back. A bad knee. Those also will make you ineligible. They don't care if you have something that will kill you quickly. They do care if you have something that may debilitate you but won't kill you.
Just run the numbers. How long would the buyout last if you were paying $5k a month in long term care fees? Even with increases, are the monthly premiums cheaper than the monthly cost of actual care?
Is 5k a month even enough these days? From what I understand and from talking with people who have relatives in a LTC facility, 10k/month is more the norm, and that's not a full picture of all associated costs (medical/pharmaceutical, etc). I would do more research in your area regarding actual costs for LTC facilities and an estimate of other costs associated with living in one and needed medical care.
There are also many levels of care and types of living arrangements and associated costs and fees. I have a friend who is 93 and just moved from an apartment to an independent living complex for seniors. She is paying close to 5k/month and there is no medical assistance included at all. This is only a residence for people over 55, includes all meals, and group activities. Transportation to local grocery stores is also included. She is in good health for a 93 year old, but doesn't drive any longer and wanted to live with other seniors, vs a regular apartment setting.
I agree with the above poster. LTC is really of the most benefit in your plan when you are young to help insure that the assets are still there as you age.
I would keep the policy. As you said you likely cannot replace it.
For those regretting buying when they are young I submit the following. When you are young is when a need for LTC can wipe out your finances, particularity hurting your spouse in their old age. A car accident, a fall off a ladder, a skiing accident can put someone into needing nursing care at a young age, when they are not likely to pass away, but linger on for a long time. That is why we bought our LTC early and continue to pay the premium increases (which haven't been that bad for us).
Also as you age you there is a good chance you will find they won't sell it to you if you've shown any reason for them to think you might need it. Increased weight is one precluding factor. A bad back. A bad knee. Those also will make you ineligible. They don't care if you have something that will kill you quickly. They do care if you have something that may debilitate you but won't kill you.
My 55 year old co worker was painting and fell off the ladder ..he broke his wrist and hip ... during hip surgery he had a stroke ...he is paralyzed..financially it devastated his family as he is now in home on Medicaid and they are impoverished at this point
You never know when you might need nursing home care
Some people have strokes at younger age than normal and can’t make recovery
Some people are in car accidents
One person in my local area was bitten by mosquito that gave him Nile virus and had neurological complications—needs home health and was too young for Medicare—was working, lost job, etc...
The point for me is that a LTC policy is not only for people who are old—
If there was a decent national insurance plan people wouldn’t have to plan for debilitating illnesse
And nursing home care needs to be part of the national health care debate
Believe me I know that! The thing that originally got me to purchase at my relatively young age (I bought when I was pre-50) was that a friend was diagnosed with early onset Parkinson's at 35. After about 5 years it was so bad that she could no longer walk and her husband couldn't handle her issues and bailed out on her. Her family lived hours away and didn't want to take her in. That left it to us, her friends, to do what we could, but she ended up in LTC by age 45. I didn't ever want to be in her situation, alone with no one to take care of me, and basically broke. I just consider it one more insurance that I have to pay on...health, dental, auto, homeowners, motorcycle, LTC, umbrella, etc, etc.
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