Full LTC premium refund offered with rate increase (long-term, federal, states)

[TwoByFour]

Originally Posted by TimAZ

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.

It's a win-win for the insurance company. If you do the buyout, they got an interest free loan from you and I am sure they made a pile of money off of it. If you don't take the buyout, they still make money off you in the normal way insurance companies do.

If your reason for getting the LTCi still exist (and I am sure it does), I would ignore the buyout and just continue the policy.

[jghorton]

Thanks for responses!
A few of my concerns are:
1) The 5-percent increase is manageable, but, if future premiums went-up 30-40-percent in the future, it would certainly erode the longer term potential value of the policies.

2) The full buyback offer is attractive, but, $50K won't buy much replacement mileage or LTC benefits. However, if I don't take it and premiums go up (or benefits down), they may not re-offer buyback again and we could be out-of-luck

3) The company has already stopped selling new LTC policies, so, I'm wondering how good the service might be in the future if/when we need them.

[bpollen]

Originally Posted by jghorton

After 10-years (72/76), we recently got our first 5-percent (prox) increase in our LTC premiums (3-yrs each X2 w/shared provision; worth about $200K/$400K at full payout, J.Hancock).

With the increase came an offer for a full buyout in the amount of all premiums paid over the past 10-years (more than $50K). My wife's age and recent health issues would make a replacement policy difficult, so my inclination is to simply pay the increase. However, I expect more increases to follow ... and am not sure this unusual buyout offer will be repeated.

Are there other issues I should be considering? - Must decide by January.

So, they want to have borrowed $50k from you, without paying you interest? That's a pretty nifty trick. Wish I could borrow $50k for 10 yrs w/o interest.

Their credit rating seems to be great. So I guess they want to knock off (no pun intended) the older clients, to lower risk of payouts.

Maybe you can calculate the interest rate(s) for the 10 yrs, and come up with an amount equal to the payments + interest. It'd be complicated to do, but could be done. Pretty sure they wouldn't go for it, tho.

[mathjak107]

Originally Posted by bpollen

So, they want to have borrowed $50k from you, without paying you interest? That's a pretty nifty trick. Wish I could borrow $50k for 10 yrs w/o interest.

Their credit rating seems to be great. So I guess they want to knock off (no pun intended) the older clients, to lower risk of payouts.

Maybe you can calculate the interest rate(s) for the 10 yrs, and come up with an amount equal to the payments + interest. It'd be complicated to do, but could be done. Pretty sure they wouldn't go for it, tho.

Actually they covered him all that time .. try that with your term life policy or home or auto insurance carrier ....he paid to be covered and they did that , they owe him nothing ...the fact they will give him anything back is a bonus

[leastprime]

Thanks for the heads up.
We have individual policies. 16 years holding. 3 companies, 4-5 rate increases. Started at 100/day, now approx 218/day, 1095days. 5% inflation coverage. Current ~ $4000 (?)/ Yr premiums, together. I estimate about $50k in total paid premiums.

I doubt that we take a refund of premiums.
We took care of 3 parents at home. And the 4th parent i stayed nearby for any needed assistance. We bought and maintain LTCi for a specific reason which will not go away with any refund. We may have sufficient assets for out-of-pocket ltc.
I expect that a premium refund will also be taxed since premiums were itemized deducted . We are planning on LTCi coverage to stretch out retirement income & assets with a high expectations to leave a legacy.

I/we needed to see more discussion.

[mathjak107]

Originally Posted by leastprime

Thanks for the heads up.
We have individual policies. 16 years holding. 3 companies, 4-5 rate increases. Started at 100/day, now approx 218/day, 1095days. 5% inflation coverage. Current ~ $4000 (?)/ Yr premiums, together. I estimate about $50k in total paid premiums.

I doubt that we take a refund of premiums.
We took care of 3 parents at home. And the 4th parent i stayed nearby for any needed assistance. We bought and maintain LTCi for a specific reason which will not go away with any refund. We may have sufficient assets for out-of-pocket ltc.
I expect that a premium refund will also be taxed since premiums were itemized deducted . We are planning on LTCi coverage to stretch out retirement income & assets with a high expectations to leave a legacy.

I/we needed to see more discussion.

i would see what type of partnership plan your state offers and then take the money and look in to a partnership plan if they offer enough perks over just an ltc plan

[leastprime]

MJ, #36.
Our plan (then Oregon, now Washington) was started before partnership was authorized. Subsequent carrier changes allowed a decrease in benefits (shared - partnership) but without a substantial change in premium for the level of courage we desired. Which means I investigated this possibility a long time ago.
Our assets , not inome, then, now, & future would probably be enough to exclude partnership coverage for any Ltc less than 3-4-5 years.
Our assets and Income are not sufficient to self insure for more than 1 years with full custodial care, without jeopardizing the spouse coverage or legacy goal.
Our ltc benefit was Always thought to be used in conjunction with Income.
The last set of GLWB annuities were chosen, in part for the LTC feature, where We could use this as an income supplement or as an option to drop LTCi.
We don't want to be beholden to the State for our end years. Never, ever (Excepting Hospice).

Physician's Directive will be finalized next week.

[mathjak107]

Originally Posted by leastprime

MJ, #36.
Our plan (then Oregon, now Washington) was started before partnership was authorized. Subsequent carrier changes allowed a decrease in benefits (shared - partnership) but without a substantial change in premium for the level of courage we desired. Which means I investigated this possibility.
Our assets , not inome, then, now, future would probably be enough to exclude partnership coverage for any Ltc less than 3-4-5 years.
Our assets and Income are not sufficient to self insure for more than 1 years with full custodial care, without jeopardizing the spouse coverage or legacy goal.
Our ltc benefit was Always thought to be used in conjunction with Income.
We don't want to be beholden to the State for our end years. Never, ever (Excepting Hospice).

dollar for dollar partnership plans are good no matter what state you go to , they are transferable .. the 100% asset protection plans revert to dollar for a dollar plans out of state .

[leastprime]

Originally Posted by mathjak107

dollar for dollar partnership plans are good no matter what state you go to , they are transferable .. the 100% asset protection plans revert to dollar for a dollar plans out of state .

I know.
There are NO free lunches. We reserve the right to pull-the-plug and-or move back to Oregon to have that Right-to-Die.

[EveryLady]

Originally Posted by jghorton

Thanks for responses!
A few of my concerns are:
1) The 5-percent increase is manageable, but, if future premiums went-up 30-40-percent in the future, it would certainly erode the longer term potential value of the policies.

LTCi is only one business component (you could check the %), with as you point out no further policies being sold and now more attempts to reduce its overall exposure. The future is a guess but the lower its potential liabilities the more likely the company may be to hold future increases to a minimum to avoid bad press and damage their overall brand.

Originally Posted by jghorton

2) The full buyback offer is attractive, but, $50K won't buy much replacement mileage or LTC benefits. However, if I don't take it and premiums go up (or benefits down), they may not re-offer buyback again and we could be out-of-luck

As another poster said, you decided to purchase initially for a reason - with some folks more at risk for a future problematic situation than others due to a variety of variables. For example, couples may be less likely to utilize LTCi than singles but then singles need not worry about a community spouse.

Originally Posted by jghorton

3) The company has already stopped selling new LTC policies, so, I'm wondering how good the service might be in the future if/when we need them.

Prior to deciding not to buy a year or so ago (the current entry price points are high, very high) I spent a lot of time on blogs. Some already found John Hancock problematic when it comes to customer service. For example, some policies are written with more specificity than others. 'Home' care might mean literally that - in your home but not necessarily in a CCRC that may not be specifically mentioned in the policy with a payout subject to interpretation. Good advice from those that used policies was to (1) obtain specific definitions for key words and how the policy would apply in future use situations that you envision now but may not have 10 years ago at purchase, (2) plan for who will be handling any future claims - the spouse may not be the best person. That said, even those complaining about John Hancock got their claims paid in the end.

My take is ... those who purchased policies decades ago made out like a bandit ... those who purchased years ago will still find good value should it be needed ... as for the present, there is a reason only thousands of policies are now being sold annually instead of the previous hundreds of thousands.