Geez Genworth, Your Comdex Score is Now a 61

[Mr_Ed]

6%??!!! What a load of horse sh%t. Right now their "Accumulation UL" has a 4.5% Current Interest Rate... and we all know that LI is MUCH more profitable than LTCI for the carrier... How they can say that with a straight face I have no ******* clue.

And claims performance?? We all know how that has gone over the past 10 years!

SC, the 4.5% interest rate for the accumulation UL is what they "credit" to the cash value of the policy, correct? (before expenses).

That 4.5% is NOT what they say they are earning on their general fund each year. Right?

The 6% Herman is referring to is what they say they expect to earn on their general fund every year.

 

[wc2624]

The direction of the industry appears to be structures which are formatted similarly to the TA step rated plan. MOO has one and I wouldn't be shocked if they pull the guaranteed increase plans at some point. JH's plan has a lot of the same elements and it's probable that Genworth's rumored new plan will also be of the same structure type. We'll see on that.

As to specifically JH's plan, my initial reaction is that it is a bit too complex with not enough "knowns" for the client. We don't know what the policy is going to cost next year or in 20 or 30 years. That's a tough sell.

 

[Mr_Ed]

The direction of the industry appears to be structures which are formatted similarly to the TA step rated plan. MOO has one and I wouldn't be shocked if they pull the guaranteed increase plans at some point. JH's plan has a lot of the same elements and it's probable that Genworth's rumored new plan will also be of the same structure type. We'll see on that.

As to specifically JH's plan, my initial reaction is that it is a bit too complex with not enough "knowns" for the client. We don't know what the policy is going to cost next year or in 20 or 30 years. That's a tough sell.

MOO does not have a step-rated inflation benefit.

It has level premium inflation benefit choices with a buy up to a higher level premium inflation benefit choice.

 

[Arthur Rudnick]

Hey,
I have an idea................

Instead of these carriers coming up with convoluted features & benefits, why don't they just price a basic policy correctly (for once) and sell what the customer wants to purchase, not what the carrier wants to sell?

Nah, I guess that makes too much sense.

 

[ltcadviser]

Hey,
I have an idea................

Instead of these carriers coming up with convoluted features & benefits, why don't they just price a basic policy correctly (for once) and sell what the customer wants to purchase, not what the carrier wants to sell?

Nah, I guess that makes too much sense.

Because some companies hire marketers to sell smoke and mirrors because some agents will sell it and some consumers will buy it.

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The 6% Herman is referring to is what they say they expect to earn on their general fund every year.

The "benefit builder" policy failed to do that right out of the gate.

By the time a policy holder realizes no credits are coming its too late.

 

[scagnt83]

SC, the 4.5% interest rate for the accumulation UL is what they "credit" to the cash value of the policy, correct? (before expenses).

That 4.5% is NOT what they say they are earning on their general fund each year. Right?

The 6% Herman is referring to is what they say they expect to earn on their general fund every year.

Ah. That makes a lot more sense now. And yes, you are correct.

 

[Mr_Ed]

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The "benefit builder" policy failed to do that right out of the gate.

By the time a policy holder realizes no credits are coming its too late.

They got 6% one time.
Most of the other rates of return on their general account were around 5%.

The problem with the benefit builder was how agents sold it.

Agents would say that the inflation growth of the benefit builder was whatever growth was in the "general account" that was above 3%.

Agents would say, "a 7% rate of return on the general account means your policy will be credited with 4%".

That's sort of an accurate statement. The problem is that it implied that the benefits would grow by 4%.... which wasn't the case... it was a very complicated formula and I'm sure most agents did not truly understand how it worked.

 

[ltcadviser]

They got 6% one time.
Most of the other rates of return on their general account were around 5%.

The problem with the benefit builder was how agents sold it.

Agents would say that the inflation growth of the benefit builder was whatever growth was in the "general account" that was above 3%.

Agents would say, "a 7% rate of return on the general account means your policy will be credited with 4%".

That's sort of an accurate statement. The problem is that it implied that the benefits would grow by 4%.... which wasn't the case... it was a very complicated formula and I'm sure most agents did not truly understand how it worked.

Oh, I saw how it worked...if JH earned 6% year in year out the policyholder could have expected to earn about 1% compounded interest that was backloaded to be credited in later years of policy. A 5% earning basically would net policyholder zilch.

I would not count on an agent understanding this product either but many agents will not be concerned about his or her client's life in 15 years. The agent will just want to write a policy today. :(

 

[scagnt83]

They got 6% one time.
Most of the other rates of return on their general account were around 5%.

That is pretty low compared to Mass. Idk what the GA did, but in 2014 they paid a 7.1% Dividend Rate to policies. So the GA would have been higher than that...

 

[Charlie456]

Hey,
I have an idea................

Instead of these carriers coming up with convoluted features & benefits, why don't they just price a basic policy correctly (for once) and sell what the customer wants to purchase, not what the carrier wants to sell?

Nah, I guess that makes too much sense.

I think the problem is when the carriers poll the public they all say if it was cheaper they would buy it, and it's really not possible to build it cheaper because people actually use this stuff. So they try by pulling out important benefits like TA just did removing their 3% auto compound. IMHO, the mistake lies in the fact that the carriers are listening to the public and trying to make it cheaper initially instead of exposing the risk for what it really is and showing the true value of a comprehensive plan. While it's certainly true (and unfortunate) that many can't afford good coverage today, it's also true that there are plenty of people who can afford it but prefer to spend their money on non essentials for the sake of instant gratification and close their eyes hoping a LTC event doesn't happen to them.

Taking an old GNW Priv Choice plan (a really great plan) and pricing it "appropriately" today would be very expensive.