John Hancock was a early pioneer into the Long Term Care Industry and sold their first policy in 1987. However, in November of 2016 they announced they were not longer going to be selling a traditional Long Term Care plans and move towards a John Hancock Hybrid Long Term Care Insurance plan which combined universal life insurance and long term care insurance.
The product that replaced their stand along LTCI product is John Hancock hybrid long term care insurance built on a universal life backbone where the client can add a rich long term care rider that will give them the ability to use their death benefit as long term care benefits. Like their long term care product of old, the John Hancock Hybrid Long Term Care Insurance plan covers the same type of care at home or in a facility.
A healthy 55 year old female can put in $100,000 upfront and it will immediately give her access to over $500,000 of long term care benefits with the ability to pull it out at around $20,000 per month. If care is never needed then the death benefit will go to the family tax free at death. The product will offer a death benefit protection period in this case of 23 years. This means that no money is due for at least 23 years.
The Assumed Internal Rate of Return… what in the heck does that mean?
The actuaries will project years into the future what type of return they anticipate the company will receive on premiums. This current John Hancock Hybrid Long Term Care Insurance plan anticipates a 5.05% rate of return. Every year the client will get a statement updating them on their policies performance. If theirJohn Hancock Hybrid Long Term Care Insurance plan averages 5.05% at the end of the 23 years no more money will be due. If they do not or the company has financial woes they could ask the client for more premium if they would like to continue the policy once the guaranteed period is up.
The company already has 1.2 million outstanding policies, which will remain intact. But no new policies will be sold moving forward. This move came following years of premium hikes for existing policies and lowering consumer demand. But the withdrawals also raises concerns that planners, government officials, and financial services firms have known about a looming long term care crisis for years. More than 10,000 baby boomers are retiring each day.
Long term care for seniors is more common than most people tend to think. Statistics suggest that up to 70% of Americans above the age of 65 will need this form of care at one point. With nursing home care costing nearly $100,000 per year, the need for coverage cannot be understated.
John Hancock Hybrid LTC – your options
Despite John Hancock’s withdrawal from the LTC market, long term care insurance still remains crucial as part of a retirement plan. Other options exist.
For once, John Hancock has an improved LTC rider that can be added to a life insurance policy from the company to provide LTC benefits if the need so arises. With this LTC rider added to your life policy, you meet 2 important needs – LTC coverage, and a death benefit protection. John Hancock’s life insurance LTC rider provides more some flexibility in that you can choose the amount of LTC coverage you want to get.
And if this life insurance + LTC rider approach doesn’t appeal to you, there are still a lot of options on the table. You can easily get an annuity based hybrid LTC plan or a hybrid life+ltc policy from other major insurance providers.