Genworth

[policy doctor]

Well well.....looks like that rally cry of "We have never raised rates"
is going to be silenced.

Just got a letter informing us that Genworth will be raising rates on policies sold from 1997.....around 8-12%. Better than the 25% per yr for 3 yrs with Penn Treaty.

They cited persistency as the main reason for the increase. Who would have thunk?

 

[InsuranceJosh]

Here is the link.

National Underwriter Life & Health

PolicyDR, How do you know everything so fast?

 

[JMO Fan]

Persistency seems the poorest of reasons, at least from a public policy perspective. It means the initial rates assumed Genworth would have enough to pay LTC claims if enough policyholders lapsed. People have kept their policies, so Genworth raises their rates.

Insurance depts need to put a stop to such predatory pricing.

 

[bluemarlin08]

Insurance depts need to put a stop to such predatory pricing

WHAT? Assuming certain lapse % is important in pricing most all insurance especially LTC. LTC, IMO, is still underpriced, even with the rate increases GE is taking, and I still believe they have the best policy for married couples available.

 

[JMO Fan]

LTC is supposed to be a level premium product -- for life. If the carrier assumes too many lapses, it lowers the initial rate. If they're assuming that they'll raise the rates later, that's pricing it as an increasing rate, like term insurance, which isn't fair (or legal).

I don't have a problem with carriers that did their best in pricing, didn't foresee changing morbidity, mortality, or expenses. But taking advantage of lapse-supported pricing puts the carrier in an unfair position to win if you lapse, but if you don't, they raise the rates and win anyway. The insured loses either way.

 

[bluemarlin08]

I won't argue that some companies priced their policies low with the intention of raising rates in the future. We all have seen the dramatic rate increases with these type of companies. I don't believe companies like GE were part of that group, considering lapses in determing pricing may not seem right to you, but actuarilly part of their policy.

 

[policy doctor]

Ltc belongs to the medical group, and like any other medical insurance product it is subject to inflation.

Personally, I've come around on that inflation rider issue, and feel it is better to buy the max daily benefit you can afford, and in sev years if you can buy another policy, either re-write or buy add'l benefits.

We are in an age where fixed products are getting obselete....everything is heading towards a variable basis....look at EIUL, EIA, inflation riders, and of course, a fluctuating premium.

 

[bluemarlin08]

Are you saying that a client shouldn't buy inflation riders, rather buy as much daily benefit they can afford, then in a few years buy additional coverage? What if there has been a change in health? I prefer for a client to buy the current benefit needed to pay expenses currently in their area and add as much COMPOUND inflation. IMO.

 

[JMO Fan]

Compound inflation riders are clearly the protection most people actually need, if they can afford it. Government rules initially proposed it to be mandatory. But its high rates forced regulators to back off, although it's still required that carriers offer it.

Few states prevent carriers from low-balling the initial rate by assuming lots of lapses. That sets them up for later rate increases. Inflation has little effect, as most of the benefits are fixed at issue.

 

[policy doctor]

I show the inflation riders, but I don't necessarily endorse them for all.

It's like another 40% cost to the base premium.....

but we all have different selling techniques.