The REAL Reason John Hancock is Discontinuing Sales of New Long Term Care Insurance Policies
John Hancock has sold over 1.2 million long-term care insurance policies. Most of those policies were sold between 2002 and 2012. During that 10-year span John Hancock offered some of the best long-term care insurance policies on the market. We have hundreds of clients who have purchased great long-term care insurance coverage from John Hancock.
Between 2002 and 2012, John Hancock was consistently the #1 or #2 LTCi sales leader. Hancock developed a 'new and improved' policy 4 years ago & their sales have plummeted since then. Click To Tweet
On November 9th, 2016, in most states, 14 different companies sold long-term care insurance. On November 10th, 2016, John Hancock announced that they would stop selling new long-term care insurance policies, reducing the number of active sellers to 13. Those 13 companies are (alphabetically): Auto Owners, Bankers Life & Casualty, Genworth Life, LifeSecure, Massachusetts Mutual, Mutual of Omaha, National Guardian Life, New York Life, Northwestern Mutual, OneAmerica, State Farm, Thrivent Financial, and Transamerica. (There are also some “fraternal” companies that sell long-term care insurance.)13 different insurance companies are now selling long-term care insurance in most states. Click To Tweet
For those of us familiar with the deficiencies in their “new and improved” product offerings, this decision was not a surprise. Their press release listed several reasons for their decision including: “macro-economic trends”, “changes in the distribution landscape”, “capital requirements”, “consumer demand”, blah, blah, blah, blah, blah.
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Here's the real reason:
When you don’t offer a good product your sales will fall. Without naming John Hancock specifically, I wrote about this in my blog on January 22, 2016, “Why 3 Top Long Term Care Insurance Companies Had Decreased Sales in 2015”.
In that blog I wrote:
“Seven of the top long term care insurance companies had an increase in sales in 2015. Five of those seven companies had double-digit growth in sales. One of the top long term care insurance companies had new sales growth of over 75%.
….three companies had a decrease in sales. Those three companies were offering policies that were, in most cases, over-priced compared to the rest of the market.”
Here’s more background: About 4 years ago, John Hancock created a “new and innovative” long-term care policy. After close examination of the “innovations” we concluded that the product offered much weaker inflation protection than the rest of the industry AND the policy was priced considerably higher than the rest of the industry. Higher premiums for less benefits!!! We did NOT recommend the “new and innovative” policy to our clients.
After sales for that policy flopped, John Hancock tried again with another “new and innovative” approach to long-term care insurance, in the Spring of 2015. This new policy had lower premiums than their previous policy, but it had planned premium increases! Other leading long-term care insurance companies offer policies with premiums that are designed to remain level for life (especially in states that have the new Rate Stability Regulations). Why buy a policy that has premiums that are planned to increase almost every year when you can buy one that doesn’t have planned premium increases? Needless to say, we did not recommend this “new and innovative” policy to our clients.
We were not alone in our opinion of this product.
As I mentioned in my blog last January: “Consumers now realize that the long-term care policy offered by their auto insurance company may not be the best choice for them. Consumers now understand that the long-term care policy their financial advisor sells may not be the policy that is best for them.”
Today’s long term care insurance policies offer more benefit choices than ever before. Companies that offer competitive LTC policies are experiencing growth in sales. Companies that don’t, aren’t.
One of the easiest ways to compare long term care policies...
…is by working with an agent who specializes in long term care insurance. Pick an agent (like us) that represents 8 to 10 of the top long term care insurance companies. Don’t settle for just one or two quotes.
Would you work with a realtor who showed you only two houses...
…and said, “Those are your two choices. Which one do you want?” Wouldn’t you expect the realtor to show you a variety of homes in the area you want to live in? The same is true for long term care insurance. Work with an agent (like us) who will show you a full spectrum of the long term care insurance offerings and help you find a policy that is right for you.