Maryland Law May Prohibit John Hancock Increase

[VolAgent]

I remember being told by a Mass wholesaler about their LTCi product. A lot of people bash it because it is pricey. But he told us that they priced it with an extremely low lapse ratio. He claimed that everyone used life lapse ratios when early on with LTCi. Apparently that isn't the case, so Mass assumed an extremely low lapse rate in their pricing. That is why they feel so confident that dividends will pay out in the future.

Will it play out that way, who knows. But at least they made safe assumptions going in.

 

[Mr_Ed]

Here's some interesting reading:

Crumbling Economics Undermine Long-Term Care Offerings « Palisades Hudson Financial Group

Obviously, I don't agree with her. There are a few significant false premises in her article.

 

[Crabcake Johnny]

I can tell you how I have handled all of my health clients over the past years - by telling each one of them that rate increases average 12%.

This drives the point home that they are basically renting their policy. Sure, they can keep it for the next 10 years if they want to go from paying $400 a month to $1,000.

I tell then to try and stay as healthy as possible since it's a game of musical chairs. One day to go to grab a new seat but ooops, you have a major condition and you're out. It's the name of the game and my clients deserve to know it.

I imagine I'd treat my LTC clients the same. Guaranteed premiums don't mean the carrier won't go under. If the premiums aren't guaranteed I'd tell then to expect rate increases.

Hampers the sale but it's an honest presentation.

 

[VolAgent]

I can tell you how I have handled all of my health clients over the past years - by telling each one of them that rate increases average 12%.

This drives the point home that they are basically renting their policy. Sure, they can keep it for the next 10 years if they want to go from paying $400 a month to $1,000.

I tell then to try and stay as healthy as possible since it's a game of musical chairs. One day to go to grab a new seat but ooops, you have a major condition and you're out. It's the name of the game and my clients deserve to know it.

I imagine I'd treat my LTC clients the same. Guaranteed premiums don't mean the carrier won't go under. If the premiums aren't guaranteed I'd tell then to expect rate increase.

Hampers the sale but it's an honest presentation.

Get them to short pay it. Raises the premium, but lowers the risk. Once its paid up, its done.

But you're right. If you are going to sell LTCi going forward, you better prepare them for future rate increases.

 

[Crabcake Johnny]

I tell ya, the lies start to get really old and stale from the insurers. Like the rate increases are due to ever-rising medical costs.

Really? You can see a doctor today for something basic for around $80. My father said in the 70's it was around $25.

Where's this HUGE increase in medical care? We can get generic meds for $4. I wonder what generic meds cost 20 years ago. Not $4.

The truth is medical costs have BARELY risen especially adjusting for inflation. That hospital are now charging more is simply a rip off. Aren't heart procedures easier now with today's technology then 30 years ago? Shouldn't they be half the price?

Doesn't technology make everything cheaper? It sure does. Imagine corn costing a fortune to buy and we hear "Yeah but man...those combines are expensive!!!"

 

[Mr_Ed]

I can tell you how I have handled all of my health clients over the past years - by telling each one of them that rate increases average 12%.

This drives the point home that they are basically renting their policy. Sure, they can keep it for the next 10 years if they want to go from paying $400 a month to $1,000.

I tell then to try and stay as healthy as possible since it's a game of musical chairs. One day to go to grab a new seat but ooops, you have a major condition and you're out. It's the name of the game and my clients deserve to know it.

I imagine I'd treat my LTC clients the same. Guaranteed premiums don't mean the carrier won't go under. If the premiums aren't guaranteed I'd tell then to expect rate increases.

Hampers the sale but it's an honest presentation.

I did the same thing with my medical insurance policy. When I moved out to CA, I bought a new policy with my wife. Then, we got a couple of rate increases, she shopped around and we switched to two separate policies. Then, we had some big rate increases. She had some health changes so she stayed with that company and I switched to a different one. (thanks to Rick for assisting us with his sage advice at that crucial moment.)

That strategy does not work for long-term care insurance, though. LTCi premiums are primarily based upon age. Even if someone stays healthy, after having an LTCi policy for 3 or more years, it does not make sense to switch policies. But LTCi policies are NOT increasing every year like medical insurance policies. So, there is no need to switch every few years like your medical insurance clients do.

 

[somarco]

Like the rate increases are due to ever-rising medical costs.

Really? You can see a doctor today for something basic for around $80.

There is no simple answer, but overall health care inflation is a factor. Priced an MRI machine lately?

They aren't cheap.

Rising costs are not in primary care but in specialty care, especially Rx costs and advances in robotics and imaging.

Utilization is up while premiums are down. Much of this can be tracked back to the Bush, I mean Obama recession.

 

[Crabcake Johnny]

Right, but for 95% of what I use medical care for, pretty hard to sell me on how nuts it is when I can take my son to a doc-in-the-box for an ear infection, pay $50 and I'm out the door.

Actually, adjusted for inflation I'll bet that's cheaper than 1970. I fully understand that hospitalizations and major procedures are through the roof. What I'm getting at is that's all pure BS.

I'm sure auto shops have a lot of advanced technology, but I don't think it costs $12K to do "difficult" work on my car.

I'd love to break it down. I have a feeling a lot of procedures are priced because they're "life saving" or include the word "heart." I'd love to research and find out just how "hard" it is to put in stents as compared to say, 30 years ago.

 

[somarco]

for 95% of what I use medical care for, pretty hard to sell me on how nuts it is when I can take my son to a doc-in-the-box for an ear infection, pay $50 and I'm out the door.

Then perhaps you are familiar with the HSA concept . . .

I will tell you the same thing I tell others. Right now, you do not have to buy insurance if you don't want to. If all you need it for is routine things, set up a savings account.

That is your choice.

Come 2014 the government will decide what is best for you, tell you what kind of coverage you must have and how much you will pay for it. If you do not comply, they will send you a tax bill.

 

[GreenSky]

Come 2014 the government will decide what is best for you, tell you what kind of coverage you must have and how much you will pay for it. If you do not comply, they will send you a tax bill.

You have a problem with that?

If the government doesn't tell me what is best for me, then who should?

Rick