Another Major LTC Player Making Sweeping Changes

[ltcadviser]

Seeking Alpha article on Genworth LTC

Bloomberg article on potential downgrade


Insurance policies are only as good as the company backing them. I have sold a Genworth LTC policy and used some of their life products from time to time...but it isn't typically my first choice on companies to go to. With insurance you need to not only have the best policy today, but also the best policy in the future at a price that the client can afford. With the history of rate increases in the LtC market, companies like Genworth make me nervous. They have already had one rate increase on old blocks of business and it seems like they are trying to avoid the need for doing it again in the future by drastically changing their contract. I just hope it isn't too late.

Oh wise NWML sage, how has Genworth changed their contract? Did I miss the memo?

They haven't changed their contract one bit. The contract is exactly the same. They simply removed some discounts to put its pricing on a different tier and equal to the other pricing available today from Omaha and Transamerica; and still much lower than JH SF NYL MM and NWML.

And removed some benefit period options and eliminated short pay.

Contract is still the same. NWML sure is ok in your mind with only 3 benefit period choices, so why complain about Genworth. It still has 6 benefit period choices; plus shared coverage. Plus no claims offset language. A married individual could get 24 years of coverage if they wanted it.

I read the one article you linked to days ago and it is a lousy article using an improper headline written by a guy that wants to take a long position on Genworth stock.

 

[ikeman07]

Oh wise NWML sage, how has Genworth changed their contract? Did I miss the memo?

They haven't changed their contract one bit. The contract is exactly the same. They simply removed some discounts to put its pricing on a different tier and equal to the other pricing available today from Omaha and Transamerica; and still much lower than JH SF NYL MM and NWML.

I read the one article you linked to days ago and it is a lousy article using an improper headline written by a guy that wants to take a long position on Genworth stock.

Oh excuse me...they have changed their payment options, benefit periods, and premium discounts....

All I have ever said about Genworth, is there seems to be risk with the company. A week after you blasted me on the other thread for saying this, Genworth comes out with big changes in their product and has a potential downgrade looming...all the other "wise" and "sage" people like yourself blasted me for speaking bad about Genworth.
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And, I didn't even mention Northwestern. Why do you always feel the need to throw insults because I like Northwestern Mutual and feel most of the time it is a better option and limits risk? It seems like you don't like it for the same reason you don't like Genworth right now...you can't offer it....

 

[ltcadviser]

And it still is a better contract and much less expensive than Quiet Care.

Everyone knew Geneorth was going to re-price. So what?

If you are selling an apple for $2.50 and the grocer next door raises the price of his apples from $1.00 to $1.60, I am still not going to buy your apple for $2.50 even if you toss in a .10 cent coupon for my next visit.

And it still doesn't mean the grocer next door is going out of business or his apples still don't taste better than yours.

 

[ikeman07]

The article about the improving future as it relates to Genworth's stock price is because it is slashing the LTC product because of the high risk. Which again....proves my point that their LTC product has been potentially misprinted and presents a risk to clients by having premiums increase on them in retirement.

 

[ltcadviser]

The article about the improving future as it relates to Genworth's stock price is because it is slashing the LTC product because of the high risk. Which again....proves my point that their LTC product has been potentially misprinted and presents a risk to clients by having premiums increase on them in retirement.

Northwestern has already got its rate increase approved. Upfront.

 

[scagnt83]

With insurance you need to not only have the best policy today, but also the best policy in the future at a price that the client can afford. With the history of rate increases in the LtC market, companies like Genworth make me nervous. They have already had one rate increase on old blocks of business and it seems like they are trying to avoid the need for doing it again in the future by drastically changing their contract. I just hope it isn't too late.

This is the problem with the mindset of being driven purely by cost.

At what cost does the lowest cost come by? What is the ultimate "cost" of the low cost option?

And it makes things even more difficult when the lowest cost option has the best "or equal" features as its competition.

Im not just speaking of Genworth or LTCI, it can be true in the LI & DI world too.

Dont get me wrong. Genworth policies are paying, have paid, and 99% most probably always will pay (100% probability up to SGA limits).
Not only that, but Genworth policy holders are certainly in a better position than before they had coverage.

But from a client point of view, company instability/downgrades/shakeups/etc. are not a good thing.
Nobody wants to be sold on ABC Company/Policy just to have it become XYZ Company/Policy 15 years down the road. Sure, the contract will be the same, but it certainly doesnt give you a warm fuzzy feeling about your Insurance/Financial Protection.
And just from my personal experience, policy holders of companies that have been bought out are in general not as happy as others (at least in the LI world (especially UL world)).

I think its an advisors role to help the client find a happy medium between cost/benefits/stability.


But conversely, at what cost does the highest cost product come by?
In the LTCI world there seems to be about a $3k spread (or there was) for the average policy.
Over a 10 year period thats almost a $40k difference assuming 5% compounding... that could be considered a very large lost opportunity cost.

 

[ltcadviser]

Oh excuse me...they have changed their payment options, benefit periods, and premium discounts....

All I have ever said about Genworth, is there seems to be risk with the company. A week after you blasted me on the other thread for saying this, Genworth comes out with big changes in their product and has a potential downgrade looming...all the other "wise" and "sage" people like yourself blasted me for speaking bad about Genworth.
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And, I didn't even mention Northwestern. Why do you always feel the need to throw insults because I like Northwestern Mutual and feel most of the time it is a better option and limits risk? It seems like you don't like it for the same reason you don't like Genworth right now...you can't offer it....

I can offer Genworth. And I still like Genworth. I recommended NY Life to a Colorado woman yesterday. I recommended Mass Mutual to a Missouri woman. I have made thousands of recommendations; i am an equal opportunity recommender. I have yet to find value in Northwestern when I do apples-to-apples comparisons. If it was there I would recommend it and refer my client to you. The value is not there. Yet.

 

[ikeman07]

In case everyone missed it........I DIDN'T BRING NORTHWESTERN INTO THE CONVERSATION....I was talking about Genworth.

 

[scagnt83]

their LTC product has been potentially misprinted and presents a risk to clients by having premiums increase on them in retirement.

Its not just Genworth. It was across the board, even the big 3 Mutuals.

Back at NYL when I started they had just released a new LTCI product to replace the old one. Of course it was pitched as "new and improved", and it did have one or two features different if I remember correctly.
But the main difference was the price.

Even our LTCI regional trainer guy said point blank that NYL had miss-priced early LTCI lines and the rate increase would most likely be seen again in a few years.

Of course some miss-priced more than others.

The difficulty of cash flow planning for retirement is certainly exacerbated by LTCI premium increases.
In general imo, LTC and the many dangers it poses to retirement is huge.

But its hard to justify a $3k premium difference. Especially when your argument is "cash flow".
Over 20 years thats a lost opportunity cost of $100k+. That is a lot of buying power for any future rate increases...

Even if that $3k spread lasted just 10 years, that would create over $65k of buying power after 20 years.

Assuming age 75 when that 20 year mark hits and using current spia rates, thats an extra $5k per year in premium increases that client is able to handle (should the need arise).

 

[ltcadviser]

In case everyone missed it........I DIDN'T BRING NORTHWESTERN INTO THE CONVERSATION....I was talking about Genworth.

You actually were mispeaking about Genworth by saying it changed its contract. Which it did not. It's contract is still exactly the same. It does not have claims offset language; it pays for independent, unlicensed, uncertified caregivers, etc. The contract hasn't changed. I simply corrected you.