Is There Such a Thing As Locking Your Rate for a Medgap Plan?

[sam816]

I heard from a client that her friend (T65) was able to find an agent who helped her lock her rate for a supplement plan, and her friend's birthday month is Nov.

I always thought the rate for a supplement plan is determined by the effective date not the application date, and if an application is turned in before one becomes eligible for Medicare, and there is a rate increase between the application date and effective date, she will get the increased rate.

Am I correct on this?

TIA.

 

[Todd King]

I heard from a client that her friend (T65) was able to find an agent who helped her lock her rate for a supplement plan, and her friend's birthday month is Nov.

I always thought the rate for a supplement plan is determined by the effective date not the application date, and if an application is turned in before one becomes eligible for Medicare, and there is a rate increase between the application date and effective date, she will get the increased rate.

Am I correct on this?

TIA.

You are correct.

This almost sounds like what United American agents used to (probably still do) tell the client in SC. Because UA is an Issue Age company, they would tell the clients that the premium would never increase due to their age. Somehow, all the clients ever heard was that the premiums would never increase for any reason. Of course, the clients found out quickly that UA had a yearly rate increase anyway.

Most companies will automatically have either a 6 month or 12 month rate guarantee where it won't go up. That's probably what the agent was referring to. If that be the case, the agent did nothing special except point out the company's initial rate guarantee.

 

[somarco]

Todd, maybe some of your carriers are different, but when I have asked about an initial rate guarantee the response is "it is not guaranteed but this is our customary practice".

BCBCGA states they can (and will) raise your rates at any time given 60 days notice. In the past I have had Omaha clients that received more than one increase in the same year. Pretty sure ACLI gave a 2nd increase the last year they wrote business in Georgia.

Back to Omaha, lost a prospect to them last year when the agent said the applicant's rates would not increase for 3 years. "Proved" it by showing the rate card with the same rates at age 65, 66 and 67.

 

[axeman462]

I was thinking the OP ran into a Bankers agent. I hear it all the time from customers who talk to Bankers "But he said its guaranteed to never increase..."

 

[Newby]

Pretty sure the rule with Aetna is if they draft upon approval the current rate is guaranteed 1-year. If they draft upon effective month an increase prior to the effective date would be applied.

Customer's choice.

 

[Chazm]

I was thinking the OP ran into a Bankers agent. I hear it all the time from customers who talk to Bankers "But he said its guaranteed to never increase..."

Yeah Bankers agents love to say this!
I then tell them that not only will you have increases, but you're starting off paying 20% more. Then I say, "what he probably meant to say is that you are locked in your age band. You will always pay what a 65 year old pays but you will have increases over the years".

Bankers agents are just trained so poorly. This is from first hand knowledge

 

[Todd King]

Todd, maybe some of your carriers are different, but when I have asked about an initial rate guarantee the response is "it is not guaranteed but this is our customary practice".

BCBCGA states they can (and will) raise your rates at any time given 60 days notice. In the past I have had Omaha clients that received more than one increase in the same year. Pretty sure ACLI gave a 2nd increase the last year they wrote business in Georgia.

Back to Omaha, lost a prospect to them last year when the agent said the applicant's rates would not increase for 3 years. "Proved" it by showing the rate card with the same rates at age 65, 66 and 67.

Maybe I was misunderstanding the OP's question, but when a company allows you to write XX amount of days out (90 days for instance), I just don't see how they could raise rates on that individual as soon as the policy goes into effect.

Example: Agent writes for a company that allows you submit business now for an effective date of November 1st. The premium today is $110.00, but in October they have a rate increase that will make it $120.00. How would the company justify a $10.00 rate increase before it even goes into effect? Most companies will have either a 6 month or 12 month rate guarantee.

In all my years I've never had to go back to a client and explain how the company raised their rates before it even went into effect.

As for Mutual giving 2 rate increases within a year, I suspect it's because it is an Attained Age policy, not an Issue Age policy. MoO give a 12 month rate guarantee. I do believe that is for the first 12 months only though, as is most of the company's "rate guarantees".

 

[somarco]

I rarely take an app more than 60 days out. Supposedly some carriers will take one 6 months before the effective date and hold the rate. Can't say. Never tried it. I have taken a few up to 90 days out. Carrier held the quoted rate.

Blue will issue a policy then send an increase letter. Had that happen before. Took an app for a Dec eff date. Right after that they increased rates for January. My client got the "renewal" the first month the policy was in effect. He got 3 months at the initial rate then the higher rate.

As for Omaha, I believe they do hold the rate for 12 months. After that they have increased rates any time they want. Did it during a switch from either United World to United of Omaha, or United of Omaha to Omaha Insurance Company.

Georgia is an issue age state, so had nothing to due with age change.

 

[Todd King]

I rarely take an app more than 60 days out. Supposedly some carriers will take one 6 months before the effective date and hold the rate. Can't say. Never tried it. I have taken a few up to 90 days out. Carrier held the quoted rate.

Blue will issue a policy then send an increase letter. Had that happen before. Took an app for a Dec eff date. Right after that they increased rates for January. My client got the "renewal" the first month the policy was in effect. He got 3 months at the initial rate then the higher rate.

As for Omaha, I believe they do hold the rate for 12 months. After that they have increased rates any time they want. Did it during a switch from either United World to United of Omaha, or United of Omaha to Omaha Insurance Company.

Georgia is an issue age state, so had nothing to due with age change.

In my experience with issue age companies with a 12 month rate guarantee, it's only for the 1st 12 months (pretty sure). So if a client was written right before the original rate increase (for example), they won't see that rate increase until the 13th month. Then, if there is another right after that, they will see that one immediately. Therefore, 2 rate increases almost back to back. I can see how that may happen.

 

[Roy2015]

So is it ever possible for someone to "lock in their rate for 18 months"? I have heard agents say that they will tell the applicant that to help close the deal right then. This includes an agent from a video I watched from the Med Supp Sales Summit.

If I was going to write someone with Cigna 6 months out from their effective date, and Cigna drafts on the effective birthday month, then their rate would be locked in for a year from the effective date correct? So what if there is a rate increase during the 6 months leading up to their birthday month? In this case...would they be subject to the rate increase during the 6 months between the application and the effective date? Or would they actually "lock in their rate for 18 months"?