Anyone Worried About Genworth's AM Best "A-" Rating??

[term2u]

I fully understand to sell value and not price - I've heard that from virtually every sales manager that I've ever worked with. The reality is, is that this client is not looking for anything more than a term policy from a reputable carrier - He doesn't care about conversion options, or any of the other bells and whistles, just straight term.

Since Genworth's rating has slipped as of late (AM Best A- Negative Outlook), I was more trying to gather a consensus as to whether you guys feel comfortable in recommending Genworth to new prospects, as I'm kind of on the fence.. For instance, Principal is next in line on the pricing and they will go up to 251 on the weight. Therefore, if he looses a bit of weight and I can get him to Std+ NT with Principal, then it makes perfect sense, as all of the other carriers are going to bump him down to Std NT. Essentially, I try to get my clients the best rates from the least expensive carriers available, while also trying to find them exactly what they're looking for.

Lastly, I also don't believe in the notion that cheaper is always an inferior product.. For instance, on the attached quotes, Principal is next in line.. Would you say that Principal is an inferior company, and if so, which carrier might you recommend? Also, where would he top out health-wise with the company you'd recommend, based on their published guidelines and I'd be curious to know their pricing for the same face/term length??

 

[donamese]

There are too many different factors unknown to the majority for people to know exactly what is causing what. For example, a carrier may have a B rating but that may be because a related but unrelated occurrence happened. I know Oxford Life had their rating hacked by AM Best when Uhaul filed bankruptcy. Uhaul was simply trying to refinance some high interest loans, bank said no so they filed BK to get it done. Because they are sister companies, Oxford got tanked by AM Best and it took nearly a decade to get back to the A rating even though their financials never took a hit. Same goes for AIG when it was only 1 side that had the issues, the Life side took the hit regardless.

Cheap products can be a product of mispricing that will be corrected on future new business but your life client will get a good deal now, seems to happen often in FE. Maybe the company had an investment that was very good on the return so they were able to provide better rates for a block of business, happens all the time in annuities. A block can defy the actuarial pricing so rates can be reduced as well. Best just to look at a companies history, and financials to make sure they appear healthy then go by your, and your clients experience with the carriers.

 

[DHK]

My concern is the A- rating AND the 'negative outlook'.

I like Assurity and they also have an A- rating, but they have a stable outlook. For the amount of health products they have (accident, cancer, critical illness, disability, etc.) it's easy enough to explain that they don't have the same product portfolio as MassMutual, for example.

Assurity Life

Most E&O companies won't cover you if you recommended a company that's a B rating and they liquidate. A- and a negative outlook would be enough to tell me that they COULD slip into a B rating.

Price isn't everything, but knowing how to protect yourself can be everything.

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If you can help your client to prepare properly for the paramed exam, it could mean everything. Cut out the salts and drink lots of water. Flush out your system. Measure "tall" without shoes. Don't exercise the day before or the morning of the exam. Don't wear heavy clothes the morning of the exam (wear shorts and a T-shirt) and perhaps he could be recorded at a weight within the standard boundaries.

 

[WinoBlues]

I don't see a reason to write GW outside of LTC.

I don't like their underwriting, negative publicity, or their overall service.

Pricing for term is so competetive that any cost difference in their favor is nominal.

Not a good carrier for life at this time in my book.

Agreed, Other than a conversion last year I have not written them in a couple years. To big of a pain to deal with. Add that the conversion options stink.

 

[aclaro]

John Hancock's standard plus goes to 279 at 6'. Don't have enough info to tell if it's price competitive at that point.

 

[Tahoe Ray]

John Hancock's standard plus goes to 279 at 6'. Don't have enough info to tell if it's price competitive at that point.

They are really competitive but don't go below 250k face.

 

[scagnt83]

You are right that price does play a part in things. Imo price is part of the value of the product. My point is that price is not everything.

As pointed out, there are other carriers that will give him a preferred rating with that build. Which takes me back to me original point that there is not a lot of value in Genworth Life Insurance imo.

But as you mentioned, a 30% difference is a big deal to most. Just do some more research on which carriers will take him. If it was an IMO that told you Genworth was the only one then talk to a different IMO.

But unless the guy is all muscle I would really drill down hard on BP, Chl, meds, & medical history if you have not already. Build charts might not matter if there is something else lurking in there. Running through the health questions on an app often helps to dig up some medical dirt.

 

[Ami]

Interesting and informative comments. From what I've seen with ratings agencies where the rated company pays for the "rating" is that they make a good effort to make statistical predictions of the past and perhaps even to the recent past that is closer to the present.

We need to keep in mind that virtually anything can be proven or alleged using stats. For example, consider this: If your left foot is immersed in a bucket of boiling water while your right foot is encased in a block of ice, on average you should feel quite comfortable.

Keeping in mind that life insurance is (generally) a long-term (multiple year) contractual proposition, I don't believe that any rating agency would dare to crystal-ball the financial position or claims paying ability of an insurer for more than a few months beyond the point at which the underlying facts for the stats were measured.

If we look at the Canadian scene for the recent decades, it would appear that the probability for demise within 5-years was higher for companies who paid for and were awarded A or better ratings. In fact, as to the Canadian scene, the "rating" produced by a coin toss may be viewed as being more accurate.

In that regard, I wonder whether there are any statistics - spanning a decade or more - to assess the veracity of ratings insofar as being reliable indicators of an insurance company's financial prospects and/or (financial) claims paying ability for 10-years, 5-years or even 2-years from the date on which the ratings were published.

Some more food for thought relating to ratings that are voluntarily paid for by the rated entities:
1. "(S)He who pays the piper may call the tune"
2. "If Barbie is so popular, why do you have to buy her friends?"

 

[Robert Barney]

Can anyone give me the name of any life insurance company which, having failed financially, left its term insurance policy holders with policies that were no longer in affect?

In my memory, every time a life company fails, the book of life insurance business is bought by a different company, and the contracts continue.

I realize that there are those who have lost investment money, but I am talking about term life insurance products. Has ANY consumer ever lost a term life policy due to the failure of a life insurance company?

In my mind other companies have always been willing to buy those blocks of business from failed insurers, because the life insurance is profitable. Even at today's very competitive term prices, the term life policies and traditional life policies are very profitable. If a life insurance company gets into financial trouble, it is for reasons other than the life insurance policies.

 

[DHK]

This is true... just as banks fail are often taken over by another bank.

However, that doesn't mean that we, as agents, who want to show confidence in the companies we represent, EVER want to have knowingly sold a policy from a company where that has an increasing likelihood of that happening (at least according to ratings agencies).

This isn't just an issue of logistics and protection. It has to do with professionalism in our recommendations. While we cannot predict the future of any insurance company, we'd like to be certain that we are offering quality companies.