2 Months in . . . is Our Genworth Colony Term UL 30 Too Risky to Keep?

DesertDiver

New Member
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Hello Insurance Forums!

My wife and I are working to get all of our finances straight, and are 2 months in to our Colony Term UL 30 policies with Genworth Life. I did a ton of research, and the premiums with Genworth were by far the cheapest for our age group/health/death benefit. Though it's a UL policy, we plan on paying only the monthly premium and canceling after 30 years (so basically a 30 year term policy). I am a 26 y/o male in the Preferred Best No Nicotine Use health class and got a $250k policy for $19.18/month, way cheaper than any 30 year term out there.

I was talking over my policy with a buddy who was really surprised/concerned at how low our premiums were. He looked into it more and found that on June 4th Genworth will no longer be offering the policies we bought. Link to pdf announcement here: tinyurl.com/genworthPR I see that this also made news on the forms here. In addition, he's concerned that since this is a lapse-supported product (i.e. people canceling is how payouts are made) that the assumptions might be wrong and Genworth might have trouble making payouts. His advice is to switch to a more stable company/policy. It should also be noted that he would be the one selling us this new policy.

So, I'm hoping for a second opinion. Since the cost of insurance is not guaranteed, and it's looking like Genworth already cannot support the pricing of this product, should we bail out now and switch to a more expensive but more trustworthy term policy?

Thanks!
 
The changes with Genworth have no impact to your current policy. They are just prohibiting the future sale of that product. I don't think you need to worry about the pricing of your term policy since the premiums are guaranteed
 
As others have said, the policy that you purchased was priced to be guaranteed for 30 years for the original death benefit. Genworth has discontinued this policy, but that has zero impact on you and this policy. Canceling this policy for the reasons you have stated would be imprudent and any agent who suggests you cancel for the reasons you stated above is potentially violating insurance law.

In addition, he's concerned that since this is a lapse-supported product (i.e. people canceling is how payouts are made) that the assumptions might be wrong and Genworth might have trouble making payouts. His advice is to switch to a more stable company/policy.

All term products are based on this. Did Genworth under-price this policy? I highly doubt your friend is qualified to answer that question. Even if they did it's unlikely this will cause them huge financial burden. These products have to be approved by each state insurance commission the company wants it sold in. Meaning if Genworth gets the product approved in all 50 states, they have to agree that the pricing makes sense, and that Genworth has the money to make good on the promise.

Now, it's entirely possible that some of the assumptions made to originally design the product are becoming dubious, and this may very well be the reason Genwroth has decided to discontinue sale of the product. It's also possible that Genworth has sold more of the product than they originally assumed they would, and this increased volume is causing reserve concerns on their end. Either way, keep the guaranty fund in mind.

Each state will guaranty a death benefit up to a certain amount. But let's not get too hung up on that fact because it's extremely rare to see the guaranty fund be the only safety net. Insurance is the business of promises, and typically if a company becomes insolvent, other companies come in and buy out the business (i.e. keep the promise alive and make good on it if need be). So, there are so many layers of protection here, the idea that Genworth messed this up so badly that your beneficiary wouldn't get paid if you died is simply nonsense.
 
Its a ul because of the convertability to a permanent policy that lasts till you die.. It has a guaranteed level premiums for the term portion, I would have to double check the convertability part.
The guy sounds like an amateur recommending another policy.
 
Its a ul because of the convertability to a permanent policy that lasts till you die.. It has a guaranteed level premiums for the term portion, I would have to double check the convertability part.
The guy sounds like an amateur recommending another policy.

Agreed...Instead of saying that Insurance Companies often change their portfolio, this individual seems to be spinning in a negative light, to possibly make another sale.
 
I don't think you need to worry about the pricing of your term policy since the premiums are guaranteed

We have a Term UL policy. Is my understanding of the policy correct that the minimum monthly payment will remain the same for the first 30 years, and as long as we make it in a timely fashion, the death benefit will remain the same? This is true even if the cost of insurance skyrockets?
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Keep what you've got, the cost of your insurance is fully guaranteed.

Ok! Previous question answered then, I guess. Doesn't it just seem too good to be true that I'm paying $19.18/month for a 250k Term UL 30, when other 30 year terms with the same death benefits require almost double the premium?
 
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Doesn't it just seem too good to be true that I'm paying $19.18/month for a 250k Term UL 30, when other 30 year terms with the same death benefits require almost double the premium?


Not at all. I just ran an illustration with a company I write (Gleaner life) and it shows a 30-year term, $250K, 26 male, non-smoker.
Super-pref for $18.26 per month.

So, yours looks to be right on target. Keep it! Don't let anybody talk you out of it. In the future, if you could add more coverage, that's great, but I'd suggest not dropping what you have now.
 

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