Insurance Agent Forum

[policy doctor]

Well well.....looks like that rally cry of "We have never raised rates"
Is going to be silenced.

Just got a letter informing us that Genworth will be raising rates on policies sold from 1997.....around 8-12%. Better than the 25% per yr for 3 yrs with Penn Treaty.

They cited persistency as the main reason for the increase. Who would have thunk?

[InsuranceJosh]

Here is the link.

National Underwriter Life & Health

PolicyDR, How do you know everything so fast?

[JMO Fan]

Persistency seems the poorest of reasons, at least from a public policy perspective. It means the initial rates assumed Genworth would have enough to pay LTC claims if enough policyholders lapsed. People have kept their policies, so Genworth raises their rates.

Insurance depts need to put a stop to such predatory pricing.

[bluemarlin08]

Insurance depts need to put a stop to such predatory pricing

WHAT? Assuming certain lapse % is important in pricing most all insurance especially LTC. LTC, IMO, is still underpriced, even with the rate increases GE is taking, and I still believe they have the best policy for married couples available.

[JMO Fan]

LTC is supposed to be a level premium product -- for life. If the carrier assumes too many lapses, it lowers the initial rate. If they're assuming that they'll raise the rates later, that's pricing it as an increasing rate, like term insurance, which isn't fair (or legal).

I don't have a problem with carriers that did their best in pricing, didn't foresee changing morbidity, mortality, or expenses. But taking advantage of lapse-supported pricing puts the carrier in an unfair position to win if you lapse, but if you don't, they raise the rates and win anyway. The insured loses either way.

[bluemarlin08]

I won't argue that some companies priced their policies low with the intention of raising rates in the future. We all have seen the dramatic rate increases with these type of companies. I don't believe companies like GE were part of that group, considering lapses in determing pricing may not seem right to you, but actuarilly part of their policy.

[policy doctor]

Ltc belongs to the medical group, and like any other medical insurance product it is subject to inflation.

Personally, I've come around on that inflation rider issue, and feel it is better to buy the max daily benefit you can afford, and in sev years if you can buy another policy, either re-write or buy add'l benefits.

We are in an age where fixed products are getting obselete....everything is heading towards a variable basis....look at EIUL, EIA, inflation riders, and of course, a fluctuating premium.

[bluemarlin08]

Are you saying that a client shouldn't buy inflation riders, rather buy as much daily benefit they can afford, then in a few years buy additional coverage? What if there has been a change in health? I prefer for a client to buy the current benefit needed to pay expenses currently in their area and add as much COMPOUND inflation. IMO.

[JMO Fan]

Compound inflation riders are clearly the protection most people actually need, if they can afford it. Government rules initially proposed it to be mandatory. But its high rates forced regulators to back off, although it's still required that carriers offer it.

Few states prevent carriers from low-balling the initial rate by assuming lots of lapses. That sets them up for later rate increases. Inflation has little effect, as most of the benefits are fixed at issue.

[policy doctor]

I show the inflation riders, but I don't necessarily endorse them for all.

It's like another 40% cost to the base premium.....

But we all have different selling techniques.

[senior-advisor-indiana]

So who do you guys feel is the best player in the LTC market?

[bluemarlin08]

I still like GE and Hancock. Most of the differences in policies are related to home care:
1. Can benefits begin from day one or must you wait for the elimination period
2. Are benefits paid daily or can you use a monthly pool of money system
3. Are you required to use certified health care providers or can you use independent care givers
These are some of the issues I look at.

[James]

Older one gets the less need for the "Inflation Rider". A 40 yr old needs inflation rider far more than a 65 yr old.

Hancock or Met for LTCi.

[policy doctor]

If you take any financial instrument, and compound interest of 5% goes to work, after 20-30 years it takes on a life of its own, especially without taxation. In other words, you have accumulated some serious capital....even at modest amounts of money.

This is why the actuaries are freaking out....those unltd benefits, with 5% compound, or even 5/10 yr.plans....do start accumulating serious money that they owe those clients in the future, at time of claim. And now, you start selling those 40 year olds, and let's say they hold for 40 years..... can you say "FREAK OUT"

[James]

Originally Posted by policy doctor

If you take any financial instrument, and compound interest of 5% goes to work, after 20-30 years it takes on a life of its own, especially without taxation. In other words, you have accumulated some serious capital....even at modest amounts of money.

This is why the actuaries are freaking out....those unltd benefits, with 5% compound, or even 5/10 yr.plans....do start accumulating serious money that they owe those clients in the future, at time of claim. And now, you start selling those 40 year olds, and let's say they hold for 40 years..... can you say "FREAK OUT"

No doubt, and why most are trying to get out of writing those policies. Yet medical treatment is growing at a much greater rate! That is worth a "FREAK OUT" also.

[senior-advisor-indiana]

Anyone using Allianz for LTC?

[rocky top buzz]

The 3 best players in the current LTC market are Genworth, Hancock, and Met. We don't offer Met, but we do offer Pru and Mutual of Omaha. Pru and Omaha don't have great products, but they do have great underwriting if you've got a hard to place case.

Allianz's LTC product isn't that great IMO because they only need it to keep their agents happy. Allianz makes their money on annuities. I can get you a list of the biggest LTCi carriers sorted by volume if you would like.

[rocky top buzz]

Also, reagrding the current policies using COLI, I agree this is still VERY important. You can't bank on being insurable in 3,5,7, or 10 years down the road. You should buy the coverage you can afford today. If you're concerned about your client wasting money and not needing the coverage, you might want to look at moneygaurd

[policy doctor]

I think for tough underwriting Penn Treaty is the place.

So many players have exited this field, that besides the 5 big carriers, (GE, JH, Met, MOA, and PTNA) and Allianz, I can't think of anyone else.

I know Great American/Legacy is one, perhaps Bankers/Conseco, and doe