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Hancock finds interest in low-cost LTCI options

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Younger long-term care insurance (LTCI) prospects might prefer lower premiums to traditional compound inflation protection features.

Marketers at John Hancock, a unit of Manulife Financial Corp. (NYSE:TX), have published data supporting that conclusion in a summary of results from a recent survey the company commissioned.

A consulting firm gathered data on 300 U.S. individuals, ages 45 to 65, who had an annual household income over $70,000 and more than $100,000 in investable assets.

The firm asked the participants about interest in an LTCI policy that included an inflation protection feature linked to growth in the Consumer Price Index (CPI) and a policy that included an inflation-protection feature linked to the performance of a company investment account.

For an insurer, an investment-performance-linked adjustment feature is believed to be cheaper and easier to write than a traditional CPI-linked inflation adjustment feature.

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The marketing firm based the prices of the policies on the prices of actual Hancock policies that include the CPI-linked inflation adjustment feature and the cheaper, investment-linked adjustment feature.

Hancock found that 30 percent of all survey participants expressed an interest in buying the cheaper policy, compared with 14 percent who expressed an interest in owning the policy with the traditional inflation protection option.

In the 45-51 age group, 11 percent of the participants said they were interested in buying the policy with the traditional inflation protection option; 36 percent said they were interested in the cheaper policy.

When asked about preferred coverage levels, 14 percent said they would prefer to buy an LTCI policy that covered catastrophic expenses, 64 percent said they would prefer to get basic coverage at an intermediate price, and 22 percent said they would prefer to pay a high price and get the maximum amount of protection.

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