By Kimberly Lankford
Kiplinger's Personal Finance
Sunday, August 17, 2008

John Hancock, one of the largest long-term-care insurers, plans to raise rates on existing policyholders for the first time ever. It is filing for a rate increase on long-term-care policies sold in the 1990s and on some newer New York State Partnership policies.

The changes will affect about 275,000 people, or about one-fourth of the company's long-term-care customers. Premiums will rise 13 percent on policies originally issued by John Hancock; they'll jump 18 percent on policies the company took over from Fortis in 2000. The average increase will be $21 per month ($252 per year). The new rates do not apply to group policies.

Premiums are rising because John Hancock anticipated more people would drop their long-term-care coverage before collecting benefits. Genworth, another major long-term-care insurer, made a similar announcement a few months ago, raising its rates 8 to 12 percent for 440,000 existing policyholders. Before these moves, the two companies were standouts for keeping premiums constant once a policy was sold.

Bottom line: Even if your rate increases, hold on to your policy. Most long-term-care insurers have raised rates for new buyers the past few years, so not only are new premiums on a higher plane in general, but you'll also surely pay more because you are older and more likely to have health issues.

If the rate boost is a strain, shorten your benefit period to three years or drop the compound inflation protection (especially if you're in your seventies or older)rather than give up on the insurance altogether and get nothing for it.