Mutual of Omaha Joins The Party

[Arthur Rudnick]

All I hear from NWM agents is about the dividends that are used to reduce a policyholder's next premium. Great selling point.

However, I can never get a NWM agent to disclose how much of a dividend is actully paid. Either they don't know or know and are embarassed to disclose the amount.

Chuckles, how about humoring me and let me know how much in dividends were paid to NWM LTC policyholders each year since 2000?

Is it a dollar amount based on premums paid or a percentage of one's annual premium?

 

[Chuckles21]

Does it make more sense to buy:

an LTCi policy for $2,000 per year that has a 20% rate increase 10 years later

OR

a comparable policy that costs $3,000 per year and, after 10 years, starts to pay a 1% dividend?

I didn't not know we were playing the "pulling #'s out of our ass" game. Where the hell did you get the 1%, I truly would like to know. Based on our current dividend payments it would be more like roughly 16% by year ten with dividends starting in year 5. You must be a great adviser looking out for your clients in the short term.... oh wait most LTC policies are held for some time before they are used.

So let me ask you, which LTC policy would you want long term? One that is going up in cost, history does usually repeat itself so expect more in the future, or one that is going down.
- - - - - - - - - - - - - - - - - -

All I hear from NWM agents is about the dividends that are used to reduce a policyholder's next premium. Great selling point.

However, I can never get a NWM agent to disclose how much of a dividend is actully paid. Either they don't know or know and are embarassed to disclose the amount.

Chuckles, how about humoring me and let me know how much in dividends were paid to NWM LTC policyholders each year since 2000?

Is it a dollar amount based on premums paid or a percentage of one's annual premium?

Started paying dividends in:

2007 $3.9 million
2008 $6.1 million
2009 $8.6 million
2010 $8 million
2011 $11.2 million (projected)

So in a time frame of say the last 4 years when a lot of carriers either got out or increased rates, we gave money back.

 

[Arthur Rudnick]

And, If you divided $11.2 million by all of your policyholders who are entitled to receive dividends, how much is that for each policyholder?

You are talking LTC only not Life, correct?

 

[Chuckles21]

And, If you divided $11.2 million by all of your policyholders who are entitled to receive dividends, how much is that for each policyholder?

You are talking LTC only not Life, correct?

Can't help but smile at that last question. Yes that is only LTC, in 2011 we are projected to pay out roughly $4.7 billion, with a b, in dividends just towards our life products. We also pay dividends on our DI, roughly $233 million in 2011.

I can't answer your first question. As currently our LTC policies start receiving dividends starting in the 5th year. I believe though that roughly half of our LTC policies are receiving a dividend. Also I cannot answer that question as the dividend credited to individual policies increases year over year. (so the first dividend credited in year 5 is less than what would be credited to the same policy that is in year 10)

 

[Mr_Ed]

I didn't not know we were playing the "pulling #'s out of our ass" game. Where the hell did you get the 1%, I truly would like to know. Based on our current dividend payments it would be more like roughly 16% by year ten with dividends starting in year 5. You must be a great adviser looking out for your clients in the short term.... oh wait most LTC policies are held for some time before they are used.

So let me ask you, which LTC policy would you want long term? One that is going up in cost, history does usually repeat itself so expect more in the future, or one that is going down.
- - - - - - - - - - - - - - - - - -


Started paying dividends in:

2007 $3.9 million
2008 $6.1 million
2009 $8.6 million
2010 $8 million
2011 $11.2 million (projected)

So in a time frame of say the last 4 years when a lot of carriers either got out or increased rates, we gave money back.

Does it make more sense to buy:

an LTCi policy for $2,000 per year that has a 20% rate increase 10 years later

OR

a comparable policy that costs $3,000 per year and, after 10 years, starts to pay a 16% dividend?


do the math!

 

[Chuckles21]

Does it make more sense to buy:

an LTCi policy for $2,000 per year that has a 20% rate increase 10 years later

OR

a comparable policy that costs $3,000 per year and, after 10 years, starts to pay a 16% dividend?


do the math!

Either you are completely ignorant, or your reading skills need a major upgrade. Dividends don't just start in year 10, already stated in previous post, they start in year 5 and increase in value throughout the years and get capped around year 19 or so. So that year 10's rough 16% was a snap shot. In year 11 it would get more than that, in year 12 more than that, etc.

Also if a company had to raise it's rates once, chances are pretty big that they will have to raise them in the future. A good amount of carriers have done just this lately. So again I will state. You must be a great adviser looking out for your clients only in the short term.... oh wait most LTC policies are held for some time before they are used.

 

[hawaiiguy]

Healthagent- You asked "What are the LTC clients being told?"

By law, the have to be told about the company's history of rate increases.

 

[Mr_Ed]

Either you are completely ignorant, or your reading skills need a major upgrade. Dividends don't just start in year 10, already stated in previous post, they start in year 5 and increase in value throughout the years and get capped around year 19 or so. So that year 10's rough 16% was a snap shot. In year 11 it would get more than that, in year 12 more than that, etc.

Also if a company had to raise it's rates once, chances are pretty big that they will have to raise them in the future. A good amount of carriers have done just this lately. So again I will state. You must be a great adviser looking out for your clients only in the short term.... oh wait most LTC policies are held for some time before they are used.

Who can do a better job for their clients? Someone who has one policy to sell or someone who can offer a variety of policies.

The bottom line is that it makes more sense to pay a lower premium for a policy that may have a premium increase rather than pay a MUCH higher premium for a policy that may pay a dividend.

$11 million divided amongst 50,000 policyholders is an average dividend of $220 (I'm being generous by limiting it to just 50,000 policyholders--the actual # is probably 70,000).

If a policy is 50% higher in premium, then a $220 dividend doesn't even put a dent into the higher premium that they are paying.

Like I said, when the math is done, it doesn't make sense to pay a whole lot more, hoping to get some of it back.

 

[Chuckles21]

Who can do a better job for their clients? Someone who has one policy to sell or someone who can offer a variety of policies.

The bottom line is that it makes more sense to pay a lower premium for a policy that may have a premium increase rather than pay a MUCH higher premium for a policy that may pay a dividend.

$11 million divided amongst 50,000 policyholders is an average dividend of $220 (I'm being generous by limiting it to just 50,000 policyholders--the actual # is probably 70,000).

If a policy is 50% higher in premium, then a $220 dividend doesn't even put a dent into the higher premium that they are paying.

Like I said, when the math is done, it doesn't make sense to pay a whole lot more, hoping to get some of it back.

Who says I can't and don't at times sell other companies? There is nothing in my contract saying I can't write outside of NML and sometimes it makes sense to in the interest of the client. Honestly I actually have more at my disposal as I have one of the strongest carriers, NML, that you cannot offer.

One other thing you are failing to realize is strength of contract plays a larger part, in my mind, than premium. There is a reason our contracts are higher priced. We price to pay claims not to lure people into policies.

If you asked most people I think they would rather know exactly what they will be paying for a policy throughout the years, not that we can't raise rates but if we are giving money back that would go away first, than have a huge unknown of where the price could go. Raising rates is not a good indication and there is absolutely no arguing that point.

Just curious, name your so called way better $2000 company and let's look at strength of contract and carrier and then talk.

 

[GreenSky]

Just curious. What is the guarantee that NML will continue paying a dividend for 25 years or not raise the price?

Rick