Best LTC Companies

[Death Cab For Tootie]

Deathcab,

So, you're saying that since the stock insurers "are under pressure" to show a profit to Wall Street, they have to charge less premium? Hmmmm. Wouldn't they need to charge more premium if they are under pressure to show a profit? How does charging less equate to "more profit"?


They work off volume. Genworth knows that, if they raise their premiums to the same levels as mutual insurers, they'll never sell a policy again. Who would buy from them if they could get a policy from an insurer with far more strength?


That's not what I wrote. Go back and re-read it.

Of course the underwriting criteria are very different from one LTC insurer to another. That's the premise upon which my website (www.DeclinesIntoCash.com) is based.

What I said was that there are 2 mutual insurers (previously mentioned) who use the exact same actuary and TPA. Yet, the premiums for those 2 insurers vary significantly: often as much as 30%. Why does a policy from one of those mutuals cost significantly more premium than the other?

I was unaware of this. I would be very interested to see this comparison.




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The Facts:
34 years of LTCi experience.
About $5 Billion dollars of LTCi claims PAID to date.
Over $10 Billion reserved for future LTCi claims.
One rate increase of less than 13% on about half of their LTCi policyholders.

Your conclusion:
"no company has a handle on how to price these policies."


hmmmm.... I wonder.... Do they need to go 40 years with only one 12% rate increase before you will be willing to admit that they have a handle on how to price LTCi? 50 years? How long?





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Wouldn't it be better to own a policy from an insurer that is committed to the LTCi market for the long haul?




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That doesn't make any sense to me. Even with Genworth's 12% rate increase and Hancock's 18% rate increase, their policyholders are still paying significantly less than if they had gone with a "higher premium policy" that has not had a rate increase.

What do your clients gain by paying a significantly higher premium for the same coverage?

Like I've stated time and time again, I let my clients make the decision. Some like the mutual policy. Some go with the stock company's policy. Either way, they get protected, I get paid, win-win. Do I know how long it will take for me to be comfortable with how companies price their coverage? I'm not sure. What I do know is that I am very cynical when looking at companies. And when one company is owned by shareholders while another is owned by it's clients, it's easy to see where their motivation lies. Price cannot be the only conversation point in any comparison of products - stewardship of the underlying company will play a huge role in mine, and my clients' eyes.
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ouch.
the truth smarts.

game, set, match, volagent.

thank you scott!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

Did you even bother to read the articles VolAgent posted? Or are you just going to take Scott's responses at face value and disregard anything that doesn't take your viewpoint?

For the record, I'm not trying to discredit Scott's response, as he has some well-thought out viewpoints. But to ignore the independent studies of this topic is ignorant. Judging by your last response, as well as others in the past, I'm not surprised by your desire to be willfully ignorant.

 

[VolAgent]

Did you even bother to read the articles VolAgent posted? Or are you just going to take Scott's responses at face value and disregard anything that doesn't take your viewpoint?

For the record, I'm not trying to discredit Scott's response, as he has some well-thought out viewpoints. But to ignore the independent studies of this topic is ignorant. Judging by your last response, as well as others in the past, I'm not surprised by your desire to be willfully ignorant.

Thus my lack of response to the moron. Scott does have some good points. At the end of the day, its all about opinions and judgement calls. I have reasons to prefer the mutuals over Genworth and JH, just as people have the opposite opinion. Ultimately only the client can decide which policy to go with. We just have to give them the options and our recommendation and why.

 

[Mr_Ed]

Higher premiums do not imply more stable premiums.

Higher premiums do not necessarily imply more stable premiums.

A few quick points:

"The mutuals" are not all the same. One of the mutual insurers mentioned in this thread often charges 20% to 25% less than the others. There is one mutual insurer (which I've placed quite a lot of business with) that often charges 40% less than the mutuals mentioned in this thread. Are these mutuals "buying business"? Of course not.

The point is that there are a lot of factors which go into the cost of a LTCi premium especially: cost of development, cost of distribution, and overhead expenses. The more LTCi business a company does (regardless of whether the insurer is a mutual company or a stock company) the lower the expenses are per policy.


Here is the essence of what I'm saying... I'll say it 4 different ways. Hopefully one of them will make sense:

a) Just because one policy costs more than the next does NOT mean that the higher premium policy sets more money aside for reserves. Two companies can set aside the exact same amount in reserves for identical policies and have very different premiums. The difference in premium does not directly benefit future claimants, it simply covers the higher operational expenses of the one insurer vs. the other.

b) Just because one policy costs more than the next does NOT mean that the "higher premium" policy has a lower chance of rate increases. For example, two different insurers could set aside in reserves the exact same amount for two identical policies. However, the one insurer charges more premium because it has higher costs of development, higher distribution costs, and higher overhead expenses.

c) Is the policy from the "higher priced" mutual more expensive because they are more conservative in their projections and more solid in their investment portfolio? Or, is the "higher priced" mutual more expensive because they have higher costs of development, higher costs of distribution, and higher overhead expenses?

d) Is that "extra premium" your clients are paying going towards more stable future premiums or is it simply going to pay for the higher internal expenses that insurer has? If it is the latter, then your clients are not getting much value from paying significantly more premium.

 

[Death Cab For Tootie]

C. Makes the most sense for me. Thanks for your imput on this, Scott. You've given me a lot to think about.

 

[Mr_Ed]

Apparently I own GonnaFlyNow an apology. Some of us actually have clients to see. I'm sure you are going to tell me you work primarily by phone and internet, but I find that hard to believe with your personality.

I would say Scott hit the nail on the head. There are numerous factors in pricing any type of insurance. The mutuals sat back and were able to see the experience of other companies. Also, you should know that everyone grossly misjudged the lapse ratio. Instead of being similar to life insurance, it is much, much lower.

http://www.soa.org/files/pdf/2009-toronto-health-helwig-64.pdf
(And yes, just like it says, Genworth and John Hancock dominate the market)

The big mutuals do not have a large, existing book of LTCi business that was mispriced based on lapse, claims and now investment return. The fact that the price increases emerged last year when uncertainty started to enter the market shouldn't be a surprise. I have to admit, I really like a quote from the following link:

Long-Term Care Insurance

"Given the decline in long-term interest rates as a result of the current economic recession, premium adjustments may be likely in the future. According to the American Association of Long-Term Care Insurance (AALTCI), every 1 percent decline in long-term interest rates could lead to a 10–15 percent increase in LTCI premiums."

I think we all know what that means for certain stock companies.. That does not mean the mutuals are immune, but certainly they were more conservative in their pricing estimates.

And finally, I believe the following really shows the difference in premium. The mutuals are not expecting any lapses, and the stock companies expected high lapses. Hopefully they are reevaluating this in line of recent experience.

http://www.actuary.com/seac/handouts/Pricing_Lapse_Supported_Products-Grass.pdf

Most of the stock companies changed their lapse projections about 6 years ago and the new lapse projections (about 1%) have been priced into the products since then.

I appreciate Jesse Slome and all that he does for this industry. But, it's my understanding that some of the top long term care insurers are NOT using long-term bonds to reserve for future claims. It doesn't make sense for many reasons, but particularly for the reasons he listed.

 

[Jeanie2]

If I can interrupt for a moment. Has anyone heard of Equitable Life & Casualty Insurance Co.? I've heard good things about them and a couple of their policies look interesting? I know an agent that uses them a lot and thinks they are the best. So far I haven't even seen their name appear in any of the posts. Just wondering if they would be good to add. Thanks all

 

[VolAgent]

If I can interrupt for a moment. Has anyone heard of Equitable Life & Casualty Insurance Co.? I've heard good things about them and a couple of their policies look interesting? I know an agent that uses them a lot and thinks they are the best. So far I haven't even seen their name appear in any of the posts. Just wondering if they would be good to add. Thanks all

I would call them a second or third tier carrier. They have very liberal underwriting. Also, their A.M. Best rating is B++. Take it as you want, but that and their underwriting criteria can be a concern for some.

That said, they can be useful if you have someone all the major carriers would decline or heavily rate-up. Also, I recall some interesting little features in their main policy.

 

[Jeanie2]

I would call them a second or third tier carrier. They have very liberal underwriting. Also, their A.M. Best rating is B++. Take it as you want, but that and their underwriting criteria can be a concern for some.

That said, they can be useful if you have someone all the major carriers would decline or heavily rate-up. Also, I recall some interesting little features in their main policy.

Thanks VolAgent, That might explain the absence of their rating listing in their marketing brochures "Secure Best's Rating" is about all they say about AM Best.

I am appointed with Genworth & Mutual of Omaha, do you consider them better for LTCi?

 

[VolAgent]

Thanks VolAgent, That might explain the absence of their rating listing in their marketing brochures "Secure Best's Rating" is about all they say about AM Best.

I am appointed with Genworth & Mutual of Omaha, do you consider them better for LTCi?

Yes, I went to their website to find the rating and couldn't, I had to use a third party source. While ratings aren't the end all be all, I would be EXTREMELY afraid of any insurer that won't even post them.

I've already stated what I thought of Genworth and John Hancock. Maybe Scott can add something about MoO. But I'd feel more comfortable with JH instead of Genworth. JH has one of Canada's largest insurers standing behind it. Yet, GE had the foresight to spin off Genworth several years ago. GE is a financial giant, why would they ditch a life insurer unless they had concerns?

 

[mjwcnw@]

Re: Best LTC Companies. What About UTA

As for as best LTC companies, what about UTA (United Teachers Association)? They have several state endorsements and they seem to have a pretty good product, rate-wise and benefits-wise. I'd like to hear from of the LTC experts, please.