BOSTON, Nov. 20 John Hancock Life InsuranceCompany (John Hancock) today announced the results of an in-depth study of the2008 costs of long-term care (LTC), which found that LTC costs have beenincreasing in line with inflation in recent years.
Including information from more than 11,000 care providers nationwide, thestudy of national care costs conducted by CareScout, based in Wellesley, MA,revealed average costs of care in the U.S. are roughly $75,000 annually for aprivate room in a nursing home; $67,000 annually for a semi-private room in anursing home; and $35,000 annually for an assisted living facility, while theaverage cost of home care was found to be about $19 per hour.
A comparison of the 2008 national averages to those of a similar studyconducted by Harris, Rothenberg International for John Hancock in 2002,indicates that the increases in costs over the past six years appear to betracking inflation, as measured by the Consumer Price Index (CPI) during thesame time period. According to the study, the average annual increase in thecost of long-term care is trending in line with the 3.3 percent average annualincrease in the CPI during the same time period as noted below.
-- The 2008 average cost of a private nursing home room ($204 a day/$74,460 annually) has risen an average 3.2 percent per year since 2002
-- The 2008 average cost of a semi-private nursing home room ($183 a day/$66,795 annually) has risen an average 2.7 percent per year since 2002
-- The 2008 average cost for a month in an assisted living facility($2,962 a month/ $35,544 annually) has risen an average 4 percent per yearsince 2002
-- The 2008 average cost for a home health aide ($19 hourly) has risen anaverage 1.4 percent per year since 2002
"In the 1990s the costs of care, particularly nursing home care, rose at afar faster pace, but with the expansion of other viable long-term caresettings, such as home and community-based care, annual increases in the costof care today appear to be stabilizing, falling in line with the generalincrease in inflation," said Marianne Harrison, President, John HancockLong-Term Care Insurance. "Nevertheless, at this rate baby boomers are lookingat spending a startling $750,000 - $1,250,000 for a 3-5 year long-term careevent 30 years from today.(1) That's why long-term care insurance is soimportant to securing a family's financial futures, especially in the tougheconomic times we are experiencing today."
During times of financial volatility, products that protect assets, suchas long-term care insurance, can be extremely valuable explained Harrison.Owning a long-term care policy during a downturn protects people from havingto sell investments, potentially at a loss, to pay for these services, shesaid.
"Our sales force is finding during this economy that many consumers whothought they could self-insure the risk of LTC are re-evaluating thatdecision," said Harrison.
For those consumers, Harrison recommended the following:
-- Consider LTC insurance when you are young and healthy, perhaps in yourmid 40s or 50s, because the annual cost of LTC insurance is lower the youngerand healthier you are.
-- Ask your financial advisor about LTC insurance, and/or check to see ifyour employer offers this coverage as premiums offered through group LTCinsurance plans can be very affordable.
-- Buy the basic amount of coverage that is needed, instead of stretchingfor a "Cadillac" policy. For many people, a total benefit pool that will last3 to 5 years with a daily benefit that reflects the current cost of care intheir area and CPI-linked compound inflation option would provide strong,affordable coverage that will grow with time.
About the 2008 John Hancock Long-Term Care Cost of Care Survey
The John Hancock Cost of Care Survey was conducted by CareScout, based inWellesley, MA, in 2008 and released in November 2008. The survey representsthe costs of more than 11,000 providers across the U.S., including nursinghomes, assisted living facilities, adult day care centers, and home careagencies. The trending results were developed by John Hancock through acomparison of the annual changes in the cost of care in all settings between2002 and 2008.
About John Hancock Long-Term Care Insurance
John Hancock is one of the largest providers of LTC insurance overall withmore than 1 million LTC insurance clients and $1.4 billion of in-force LTCinsurance premium.(2) The company holds $9.2 billion in LTC reserves and haspaid $2 billion in LTC insurance claims.(3)
Having entered the retail LTC insurance market in 1987, John Hancock isone of the largest carriers of individual coverage in the country.(4) JohnHancock began selling group LTC insurance in 1988 and today is the largestprovider of employer-sponsored group LTC insurance in the U.S.(5)
About John Hancock Financial and Manulife Financial Corporation
John Hancock Financial is a unit of Manulife Financial Corporation (theCompany), a leading Canadian-based financial services group serving millionsof customers in 19 countries and territories worldwide. Operating as ManulifeFinancial in Canada and in most of Asia, and primarily as John Hancock in theUnited States, the Company offers clients a diverse range of financialprotection products and wealth management services through its extensivenetwork of employees, agents and distribution partners. Funds under managementby Manulife Financial and its subsidiaries were Cdn $385.3 billion (U.S.$363.5 billion) as at September 30, 2008.
Manulife Financial Corporation trades as 'MFC' on the TSX, NYSE and PSE,and under '0945' on the SEHK. Manulife Financial can be found on the Internetat www.manulife.com.
The John Hancock unit, through its insurance companies, comprises one ofthe largest life insurers in the United States. John Hancock offers a broadrange of financial products and services, including life insurance, fixed andvariable annuities, mutual funds, 401(k) plans, long-term care insurance,college savings, and other forms of business insurance. Additional informationabout John Hancock may be found at www.johnhancock.com.
Long Term Care Insurance is underwritten by John Hancock Life InsuranceCompany, Boston, MA 02117(1) Based on the John Hancock Cost of Care Survey averages and the 30-year average annual increase in inflation as measured by the CPI of 4.2% (2) As of September 30, 2008, according to internal financial records (3) As of September 30, 2008, according to internal financial records (4) LIMRA International, U.S. Individual Long-Term Care Insurance Sales Survey, Fourth Quarter YTD 2007 (5) LIMRA International, U.S. Group Long-Term Care Insurance Sales Survey, Fourth Quarter YTD 2007
SOURCE John Hancock Long-Term Care