Caught with Their Pants Down?

[Mr_Ed]

What is non-can?

How does that lead to a level premium?

Thanks!

There are some LTC insurers that have rate guarantees. If, for example, the premium is guaranteed not to go up for 10 years and they choose the 10-pay option, then their premiums are guaranteed to never go up. Their premiums are guaranteed to remain the same for the entire premium paying period.

Similarly, some policies have a "pay to 65" option. Suppose a 60-year old wants a policy, he can pay the policy up in 5 years. If the policy has a 5-year rate guarantee then his premium cannot go up.
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Thats a damn good question!

I have a LTC presentation next week and JH was what I had planned to present...

So what do I think now?
Do I really advise my client to go with a company that is about to jack up rates 40% on old business?? Who missed their mark by almost half!?

They are currently experiencing a .4% lapse ratio; what lapse ratio was built in on the block they are raising prices on? What about their new block of biz, what lapse ratio is built into it??

I have a feeling that I need to call my JH wholesaler and grill him on this!

Have your wholesaler break down the premium increases according to policy series. Many of the policies are getting less than a 25% increase. The policies that included the CPI inflation benefit are not getting any premium increase.

 

[dgoldenz]

There are some LTC insurers that have rate guarantees. If, for example, the premium is guaranteed not to go up for 10 years and they choose the 10-pay option, then their premiums are guaranteed to never go up. Their premiums are guaranteed to remain the same for the entire premium paying period.

Similarly, some policies have a "pay to 65" option. Suppose a 60-year old wants a policy, he can pay the policy up in 5 years. If the policy has a 5-year rate guarantee then his premium cannot go up.

Most people aren't forking out the money for a 10-pay or 5-pay scenario....there's still no non-cancellable LTC policies that are life pay that I've seen. If there was, I'm sure everyone would be all over it or it would be very expensive.

 

[CALTCAgent]

"Never_Dull",

When you mentioned "non cancellable", what did you mean as far as rate guarantees?

There are plenty of non-cancellable/guaranteed renewable plans that have had rate increases.

Having a plan with a rate guarantee is different.

Thanks!

 

[scagnt83]

"Never_Dull",

When you mentioned "non cancellable", what did you mean as far as rate guarantees?

There are plenty of non-cancellable/guaranteed renewable plans that have had rate increases.

Having a plan with a rate guarantee is different.

Thanks!

Non-Cancellable and Guaranteed Renewable are two different things.

Non Can means that they cannot change or cancel any provisions of the policy. (in other words: level premium)

Guaranteed Renewable means that you may always renew your policy no matter what, but at whatever rate they dictate for that block of biz.
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Most people aren't forking out the money for a 10-pay or 5-pay scenario....there's still no non-cancellable LTC policies that are life pay that I've seen. If there was, I'm sure everyone would be all over it or it would be very expensive.

Buying habits for LTC are going to need to change.

A 10 pay/to 65 is not often feasible when the client is 50-60+.
But try it when they are 30-50; then its more realistic.

LTC is a crucial part of retirement planning.
A possible 40% increase in an already large necessary expense can destroy a persons retirement savings.

Single pays/5 pays/10 pays/to 65/to 75/ along with LTC/Annuity combos will quickly become the go to products.
The question is do the insurers have enough faith in their assumptions to continue these product lines???

 

[dgoldenz]

Buying habits for LTC are going to need to change.

A 10 pay/to 65 is not often feasible when the client is 50-60+.
But try it when they are 30-50; then its more realistic.

LTC is a crucial part of retirement planning.
A possible 40% increase in an already large necessary expense can destroy a persons retirement savings.

Single pays/5 pays/10 pays/to 65/to 75/ along with LTC/Annuity combos will quickly become the go to products.
The question is do the insurers have enough faith in their assumptions to continue these product lines???

Agreed on all counts....of course, most people aren't looking for LTC until they are 50-60 and the time of a potential claim is quickly approaching. Don't worry though, LTC reform is next. It will be guaranteed-issue with tax credits soon enough!

 

[Mr_Ed]

"Never_Dull",

When you mentioned "non cancellable", what did you mean as far as rate guarantees?

There are plenty of non-cancellable/guaranteed renewable plans that have had rate increases.

Having a plan with a rate guarantee is different.

Thanks!

non-cancellable is NOT the same thing as "guaranteed renewable".

A 10-pay policy with a 10-year rate guarantee is non-cancellable. The rates CANNOT be changed. NEVER!
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A 10 pay/to 65 is not often feasible when the client is 50-60+.
But try it when they are 30-50; then its more realistic.

I disagree.

10-pay policies are usually way too pricey for someone under the age of 50--unless you leave out inflation protection.

The target market for 10-pay policies are those in their fifties.

 

[scagnt83]

I disagree.

10-pay policies are usually way too pricey for someone under the age of 50--unless you leave out inflation protection.

The target market for 10-pay policies are those in their fifties.

From my experience 10 pay policies are not available under the age of 40 with most major carriers.
And there is not a heck of a lot of price difference between a 45yo and a 50yo with a 10 pay (again, from my experience).
I probably should have left the 10 pay out for the under 50 crowd.

But there is a difference with a PU@65.
And while its not cheap, there are plenty of prospects out there under 50 who can afford a pu@65.

While cumulatively they may still pay the same (or close to the same) as if they buy it at a later age, it lessens the yearly cost burden.

Also they have a much better chance of receiving a better health rating at the earlier age, which will reduce premiums.

 

[arnguy]

Liar, liar....pants on fire!

 

[Mr_Ed]

Liar, liar....pants on fire!

Thanks for clearing that up.

 

[Norwayguy]

What is non-can?

How does that lead to a level premium?

Thanks!

Its a reference to a DI term..Non-Can means the policy can not be cancelled if you pay your premiums and the policy premiums are guaranteed level...Unlike Guaranteed Renewalable which also can not cancel the policy if you pay the premiums just that the premiums are not guaranteed.