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90 percent rate hike angers insurance policy holders

9:53 PM, Feb 13, 2012   |    comments
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Do you need long-term care insurance? Click here to learn more.

"I certainly wasn't counting on having it so expensive that I couldn't afford it all of a sudden," Cammie Raffey told 9Wants to Know.

About 2,900 Coloradans saw a 90 percent increase. More than 10,000 people saw an increase of less than that.

Long-term care insurance is usually for policy holders to go to a nursing home of their choice or it pays for in-home nursing care, among other medical needs.

Raffey has paid about $900 a year since she purchased her policy in 2003. Her yearly premium hadn't gone up. Raffey was recently told her premium would be $1,700.

Gary and Reenie Matthews of Estes Park are in a similar situation. Their premiums also went up steeply.

"It was just a total shock," Gary Matthews said.

"We had two weeks warning that it might go up, but for that type of increase, I would think you would have a lot more warning," Reenie Matthews said.

The certified financial planner practioner who sold the Matthews their policy, Gregory Seal, blames John Hancock Financial.

"I'm very frustrated on behalf of my clients," Seal said.

He claims John Hancock didn't properly manage their insurance premiums.

"They are panicking and instead of having systematic rate increases over a period of time, they smack everybody with this huge rate increase," Seal said. "Why should clients have to be responsible for their mismanagement of the business?"

John Hancock told 9Wants to Know the rate increase was necessary.

"What we've seen is that people are living longer, and significantly more people are using the insurance for longer periods of time than anticipated," Melissa Simon Berczuk, John Hancock Financial spokeswoman, said in a statement. "It is mainly this new experience that is driving the change in our future claims projections and the subsequent need to increase premiums so we are able to meet all of our claims obligations going forward."

The Colorado Division of Insurance approved the rate increase and backs up John Hancock Financial. State Insurance Commissioner Jim Riesberg said John Hancock proved to the Division of Insurance that a rate increase was needed.

"These are policies where there had never been a premium increase, even though most companies had been raising their rates on a regular basis, it had not had a rate increase," Riesberg said.

He said if the company didn't raise premiums, customers might have suffered significant losses.

"The company would probably file bankruptcy and the people insured would be left with no protection," he said. "They are only doing what is actuarially necessary to provide benefits that people had purchased."

Raffey and the Matthews decided to continue their policies with John Hancock Financial by reducing the coverage the company would provide. They were able to continue their current premium.

They found it too expensive to start over with another company because their ages had increased. Premiums are based on age and other factors.

Get more information on long-term care insurance: http://bit.ly/wR5K7e.

A long-term care planning tool is available at this website: http://1.usa.gov/zCVwkR.

Have a comment or tip for investigative reporter Jace Larson? Call him at 303-871-1432 or e-mail him at
jace.larson@9news.com.

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