Genworth Financial Inc. says it will raise rates 18% on two older blocks of comprehensive long term care (LTC) insurance.
The policies, no longer marketed, were sold by two Genworth subsidiaries, Genworth Life and Genworth Life of New York.
Genworth, Richmond, Va. (NYSE:GWN), is increasing the rates because the percentage of policyholders in the blocks who have let policies lapse has been lower than expected, the company says.
The Genworth increase was the second increase in premiums announced by a major LTC insurance carrier in 5 weeks. In September, John Hancock Life Insurance Company, a division of Manulife Financial Corp., Toronto (NYSE:MFC), announced plans to raise rates for in-force LTC insurance policies by an average of 40%.
The Genworth increase will affect 26% of Genworth LTC insurance policyholders, the company says.
Policyholders who do not want to pay the higher premiums will be offered the option of reducing the daily benefit amount permitted under the policy or changing the policy’s duration, inflation protection provision or elimination period, Genworth says.
Genworth also will offer a limited nonforfeiture option, which will provide a paid-up policy with benefits equal to the total amount of premiums paid, less any benefits already received.
Genworth says it plans to begin filing for the rate changes in early November and expects the earliest increase to take effect by
January 2011. The rate increase would take place over the next 2 to 3 years, the company says.
“It’s important to note we’re not raising premiums on the majority of our long term care business,” says Deborah Pont, a Genworth spokeswoman.
About 80% of affected policyholders will see an increase of less than $40 a month on their premiums, she says.
Genworth also cited low lapse rates in July 2007, when it filed for rate increases ranging from 8% to 12% on most of its older LTC insurance policies in all 50 states and the District of Columbia; 46 of the jurisdictions granted at least part of Genworth’s requested increase in 2007.