Admittedly, I don't sell much LTCi. But the few times I've had someone run several competing quotes for me versus a mutual, there isn't much difference. Maybe 10 dollars a month on a 300-500 a month premium. I'd gladly pay an extra 10 dollars a month knowing there is little chance I'd see a rate increase next year.
Vol,
You need to get someone else to run the quotes for you who is not pushing the mtuual products.
The difference in cost is not 3% to 5%. the difference in cost is usually at least 40%, oftentimes MUCH higher.
The only mutual co that i've seen that has competitive rates is mut. of oma.
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Deathcab,
(that's a very interesting moniker by the way)
Can you explain to the members of this forum the advantages to the mm policy which justify your clients paying the extra 40% or more in premium?
I understand that the mm policy is less likely to have a rate increase. i agree with that.
And i understand that there's a chance that the mm policy might pay a small dividend. i agree with that.
Are there any other advantages to the mm policy that justify the higher cost?
When I can point out that Mass Mutual hasn't raised prices on existing policyholders but Genworth has, it's hardly a Lexus/Camry comparison. I would equate it to a Benz/Yugo comparison. Sleek, high performance vs. gasping and wheezing to get from A to B.
Deathcab,
Don't you realize that when you are telling your clients to buy a policy that is 40% higher premium you are selling a policy that already has had a rate increase?
What is better, to sell a policy that is 40% cheaper now that MIGHT have a rate increase in the future?
Or, is it better to sell a polciy that has a 40% rate increase from the very first premium.
Caveat emptor.
Last edited by GonnaFlyNow : 08-23-2009 at 05:57 PM.
Reason: Posts merged
I am gonna type slowly so even you can understand. I show my client a Mass policy and a stock company policy. I point out up front the difference in costs. I explain why Mass' policy has a higher premium than the stock company. I ask them if they want to pay extra now, or be forced to potentially pay higher premiums in the future (presumably when they're retired on a fixed income). They choose, not me.
Now, if you show a mutual company vs. a stock company, you must explain the differences in corporate stewardship. Mutual company = owned by policy holders. Stock company = owned by shareholders. Mutual companies are much more conservative than their stock counterparts because they are not beholden to quarterly earnings reports and the price per share of their stock. Now, if a stock company's performance suffers, they will do whatever they can to please the shareholders. Which, we have seen time and time again, is to rape and pillage the policy holders. They raise rates on LTCi, increase expenses on universal life policies, and decrease or eliminate dividends. A mutual company cannot do this without prior approval of the policyholders. Why? The company is owned by the policyholders!
Again, any monkey can point out that Genworth's premium is lower than a mutual company's. The difference is to understand and explain why that is. Then, let the client decide. Ultimately it's their money. They're gonna stroke the check. If they don't choose the mutual LTCi, I'm still going to get paid. You on the other hand, can't sell the policies I can. Therefore, you must fight and argue to strongarm a client into the policy you can sell.
You need to get someone else to run the quotes for you who is not pushing the mtuual products.
The difference in cost is not 3% to 5%. the difference in cost is usually at least 40%, oftentimes MUCH higher.
The only mutual co that i've seen that has competitive rates is mut. of oma.
FYI, the quotes were not run by a mutual or someone pushing a mutual. They were run by a GA who would prefer me put the business through them, nor did the run the mutual quotes either. So, apples to apples there was not much difference in those cases.
Now DCFT, I do have to disagree with you a bit. By and large, the board of directors for a mutual can do as they please. Raise rates, lower dividends, whatever. The only option the participating policyholders have is to vote them out at the next election. That said, there is only one party for them to represent, the policyholders. There is no Wall Street or separate shareholders who are interested in short-term returns.
I am gonna type slowly so even you can understand. I show my client a Mass policy and a stock company policy. I point out up front the difference in costs. I explain why Mass' policy has a higher premium than the stock company. I ask them if they want to pay extra now, or be forced to potentially pay higher premiums in the future (presumably when they're retired on a fixed income). They choose, not me.
So you explain:
"Mr. & Mrs. Smith, you can pay $5,000 per year now with this policy issued by this mutual insurer.
"Or, you can pay $3,500 per year now with this policy issued by this stock insurer. Both policies have the same benefits with the exception of the possible dividends the mutual insurer might pay.
"You're more likely to get a rate increase from the policy issued by the stock insurer. This stock insurer raised rates by 12% a couple years ago. But, I think that it's more likely that in the next 20 years this stock insurer will raise this premium by 40%.
"20 years from now you'll be on a fixed income. You don't want a rate increase when you're retired and you're on a fixed income, do you? How would you feel if you got a 40% rate increase on that policy 20 years from now, when you're retired and old and weak and helpless. That 40% rate increase, 20 years from now, would make that premium go up from $3,500 to $4,900 per year.
"It would be a lot more affordable for you to pay $5,000 per year every year.
"uh, oops, uh, i must have pressed a wrong button on my calculator, uh, oops, let me try that again. uh, i didn't mean that, uh (darn it, that gonnaflynow lady was right after all).
"uh, Mr. & Mrs. Smith, can we re-schedule our appointment so that I can get a calculator that can explain why it makes sense for you to spend 40% more per year every year? I'm sure there's some calculator out there that can do it."
Deathcab,
You're right. i am weak. i actually believe that price is important and i do seek the best value for my customers (and price is an integral part of value).
I am weak. you are strong.
But, at least i can do the math. (just use the "+" sign on the calculator and then the "%" sign and then press the "=" sign and you'll understand what I just did.)
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Volagent,
If the difference in cost between a mutual insurer and a stock insurer was 3% (even 5%), then i'd lean towards the mutual insurer.
However, it is rarely that small.
Maybe you don't do a lot of ltci. you probably don't if you have someone else doing your quotes for you.
I regularly work up the quotes comparing the leading ltc insurers and the mutuals that deathcab has referred to and 9 times out of 10 the difference in premium is no less than 40%, often as high as 90%. deathcab admitted it was true. but he/she must be expecting double digit dividends every year on the par ltci to justify such a high premium.
Last edited by GonnaFlyNow : 08-23-2009 at 07:59 PM.
Reason: Posts merged
What part of "I let my clients decide" don't you understand? Are you that dense that simple reading comprehension is a challenge for you? Do you really think your clients are that retarded that they can't make a decision beyond seeing two numbers on a sheet of paper?
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Originally Posted by bluemarlin08
Lets try again, what are the features in a mutual policy that are better than say GE, forget pricing. Just give 2 or 3 major advantages.
Mutual LTCi = Higher premium = less of a chance of a price increase in the future. Also, a higher premium will give the insurer more reserves to pay claims. Finally, the mutual company isn't beholden by shareholders to take unnecesary risks to improve the stock price.
Last edited by Death Cab For Tootie : 08-23-2009 at 08:08 PM.
Reason: Posts merged
Lets try again, what are the features in a mutual policy that are better than say GE, forget pricing. Just give 2 or 3 major advantages.
blue,
There are no features in the mtual policy that are better than the genw policy. deathcab has conveniently avoided that point. deathcab would prefer to use ad hominem arguments to cover up that fact and to avoid having to justify the highe rpremiums.
Kw
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Deathcab,
Don't you realize that by selling them the more expensive policy now that you are selling them a premium increase from day one?
Why is a premium increase now OK.
But a possible premium increase 20 years from now is bad.
Plus, you're in florida. don't you know the fl state laws regarding rate increases were changed for policies issued after 4/1/2003?
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Originally Posted by Death Cab For Tootie
What part of "I let my clients decide" don't you understand?
Whatever happened to doing the best thing for your clients?
The implication of your statement is that you are not personally convinced that the mutual policy is the best choice.
Last edited by GonnaFlyNow : 08-23-2009 at 08:38 PM.
Reason: Posts merged
Death Cab,
Lets try one final time, disregarding premium, just looking at policy features, what do you show clients are the advantages? I don't know how to make it clearer.
Death Cab,
Lets try one final time, disregarding premium, just looking at policy features, what do you show clients are the advantages? I don't know how to make it clearer.
There isn't anything materially different regarding the features and riders of the two policies. The difference is the strength of the companies, potential rate increases, and their ability to pay claims. I hope this clarifies things.
And I just took a quick look at the Comdex Ratings for MM, JH, Met, and Genworth. Mass is 99, JH and Met are 96. Genworth is 79. That is a huge difference in strength. And if there is anything we should have learned about insurance companies over the last few years, it's that strength matters.
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Originally Posted by GonnaFlyNow
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Deathcab,
Don't you realize that by selling them the more expensive policy now that you are selling them a premium increase from day one?
Why is a premium increase now OK.
But a possible premium increase 20 years from now is bad.
Plus, you're in florida. don't you know the fl state laws regarding rate increases were changed for policies issued after 4/1/2003?
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Whatever happened to doing the best thing for your clients?
The implication of your statement is that you are not personally convinced that the mutual policy is the best choice.
I am not a LTCi candidate, but if I were, I would buy a mutual LTCi policy over a stock policy 100 times out of 100. I am quick to point out to my clients that my life and disability insurance are through a mutual company, even though they have higher premiums than comparable policies from stock companies. I practice what I preach. However, ultimately it is their decision. If they choose to buy the policy from the stock company, that's their decision. I gave up fighting clients a long time ago, and practice with the mantra "Give them a bit of what they want and a bit of what they need."
Last edited by Death Cab For Tootie : 08-23-2009 at 08:48 PM.
Reason: Posts merged
There isn't anything materially different regarding the features and riders of the two policies
Are you serious? I assume you have read policies from both and you are telling us there are no differences? How many policies do you sell annually? There are big differences!
If there is that much price difference, offer a limited pay option on the stock company policy so they dont ever need to worry about rates increasing at retirement age........ esp. with younger clients
Ultimately, the financial strength of the company is the most important thing imo. Not really sure Genworth is nec. in the best interest of my clients, alhtough an easier sale.
I have sold many ltc policies, and when running rates, hate to say it, but Genworth is not that much cheaper over a MassMutual. 90% of the time, they go with the Mass policies.
Its not only about the premium. its the total package.
Other way of presenting it...
If you own a policy by a stock company.... you were sold a policy to pay a shareholder a dividend.
If you own a policy issued by a mutual company... you are an owner of the mutual company.
Which would you rather be?
But yes, if you are all about the price... you are missing the boat. if all you base yourself is on price, your clients will leave you when the market goes down, or someone else promises a better return or cheaper policy. your clients are less likely to leave you if you provide great service.
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GENWORTH FINANCIAL 2009 NATIONAL TELECONFERENCE
“Delivering on the Promise” Claims, Reserves, and Genworth's Unique Strengths in the Long Term Care Industry
Date: Wednesday, September 30, 2009 @ 1:00PM ET
Our guest speakers will be:
• Ty Wooldridge – Chief Actuary
• Mike Heard – Senior Vice-President, Claims Operations
Participation requires registering for these calls:
1. Visit >> Multiple LTC Solutions <<
2. Register by midnight, September 28th, 2009
3. Dial-in & presentation info will be emailed to your registered email address approximately 24 hours prior to the call.
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