Low Interest Rates Effecting LTC & Life Ins.
- Thread starter Arthur Rudnick
- Start date
Many contributors to this LTC Insurance Forum are under the impression that the "sky is falling" in the LTC insurance industry.
The reality is that the sky is falling in EVERY sector of the insurance industry.
If you made a career out of selling medical insurance, how much has your life changed in the past 7 years?
If you've made a career out of selling qualified annuities, how much is your life changing now with the new DOL rules?
Now, even life insurance is being hit. New premium rates are sky high. In-force UL premiums are increasing on people who've had their policies for 10, 15, 20 years or more.
And many companies have even stopped selling life insurance (or annuities) because the interest rates are so low.
After selling LTCi over the kitchen table for almost 4 years, in 1999 I decided to only sell LTCi over the phone/internet.
To be frank, very little has changed about my business in the past 17 years (except for being able to build much nicer websites and only having to quote about 10 companies for my clients rather than 20 companies.)
So the next time any contributor talks about how things have changed so much in the LTCi industry, please frame your comments in the context of the massive changes occurring in all the other forms of L&H insurance.
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"But now some Banner policyholders are being told their monthly payments must rise as much as sixfold, prompting a lawsuit that accuses Banner of raiding customers’ accounts to pay the dividends."
SIXFOLD!
Even Penn Treaty didn't have any sixfold increases on any of their LTCi policyholders. The biggest PTNA increase I ever saw was 200% and that was only for people who bought the "personal freedom" policy with an issue age under 50.
SIXFOLD!!!!
Well, Scott, speaking for myself I do not write many policies with Lifetime benefit periods and with 5% compound inflation protection like I used to. So, my business has changed in that regard.
And hybrids are significantly prevalent options today, so I have experienced that change as well.
But yes, it is business as usual and it gets better every year.
Many contributors to this LTC Insurance Forum are under the impression that the "sky is falling" in the LTC insurance industry.
The reality is that the sky is falling in EVERY sector of the insurance industry.
If you made a career out of selling medical insurance, how much has your life changed in the past 7 years?
If you've made a career out of selling qualified annuities, how much is your life changing now with the new DOL rules?
Now, even life insurance is being hit. New premium rates are sky high. In-force UL premiums are increasing on people who've had their policies for 10, 15, 20 years or more.
And many companies have even stopped selling life insurance (or annuities) because the interest rates are so low.
After selling LTCi over the kitchen table for almost 4 years, in 1999 I decided to only sell LTCi over the phone/internet.
To be frank, very little has changed about my business in the past 17 years (except for being able to build much nicer websites and only having to quote about 10 companies for my clients rather than 20 companies.)
So the next time any contributor talks about how things have changed so much in the LTCi industry, please frame your comments in the context of the massive changes occurring in all the other forms of L&H insurance.
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"But now some Banner policyholders are being told their monthly payments must rise as much as sixfold, prompting a lawsuit that accuses Banner of raiding customers’ accounts to pay the dividends."
SIXFOLD!
Even Penn Treaty didn't have any sixfold increases on any of their LTCi policyholders. The biggest PTNA increase I ever saw was 200% and that was only for people who bought the "personal freedom" policy with an issue age under 50.
SIXFOLD!!!!
That article is misleading. Any life agent who is well informed knows the history of UL policies. This not a new phenomenon as this has been happening with UL policies for many years now. If your an agent selling a plane Jane UL policy as oppose to a GUL or Whole Life permanent policy you better have a really good financially sound reason (for the client that is) as to why you are doing so. Notice I said UL policies.
Other life policies such as term and whole life that have contractual guarantees will not see this issue. That is why in the article, a lawsuit against one of these companies is described as having no merit. The UL policy is not guaranteed to maintain level premiums. The only person who can be held accountable is maybe the agent for not explaining this to the client or not explaining that UL policies are interest sensitive.
This is not a general life insurance industry problem. Just companies who primarily sell UL and term products. The big mutuals seem to be doing just fine for example.
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The LTC industry and the life industry are not comparable in this regard. This article is comparing a type of policy of the life industry to an entire industry.
- Thread starter
- #5
Arthur Rudnick
Guru
- 1,652
originally posted by Tothetop
Why would a non-guaranteed UL policy be sold when GUL are available?
Why would a non-guaranteed UL policy be sold when GUL are available?
- 546
Cash value/earlier ROP.
Its dangerous to withdraw money on a low value policy later in life, but I have seen people "collecting the interest" off of their policies.
Who can argue with them? You'll be the one voice in the choir of insurance agents they have spoken with who tell them that's the right thing to do.
I have no idea why you are asking that. This article is referencing junk UL policies that were sold from 25 years ago and chances are were underfunded at some point.
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Also not to mention low interest rates and people touching their cash value can cause the policy to implode. Also a piece of me thinks you might have missed my first paragraph.
- Thread starter
- #8
Arthur Rudnick
Guru
- 1,652
originally posted by Tothetop
Why would a non-guaranteed UL policy be sold when GUL are available?
I'm asking because your original post led me to believe that both guaranteed & non-guaranteed ULs are available for sale today.
I understand that the NY Times article refers to older generation policies without guarantees.
Why would a non-guaranteed UL policy be sold when GUL are available?
I'm asking because your original post led me to believe that both guaranteed & non-guaranteed ULs are available for sale today.
I understand that the NY Times article refers to older generation policies without guarantees.
Oh ok. No there are ULS that don't carry lifetime guarantees. It allows for more flexibility in premium and death benefit. They serve a purpose.
- Thread starter
- #10
Arthur Rudnick
Guru
- 1,652
originally posted by Tothetop
Then I would assume that with very low interest rates as we see today, now would be the time to sell non-guaranteed UL's?
Then I would assume that with very low interest rates as we see today, now would be the time to sell non-guaranteed UL's?
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