Arthur Rudnick
Guru
- 1,652
[FONT=Arial, Helvetica, sans-serif]
[/FONT]
Date:March 28, 2013RE:Cease Sale of CareDirections Simplicity® in California Effective April 19, 2013[FONT=Arial, Helvetica, sans-serif]At MedAmerica, we are 100% committed to cash LTCi as a viable consumer choice in the marketplace. Part of that commitment includes continually monitoring and evaluating policy performance in relation to economic conditions for all of our products, all of the time. This due diligence ensures we can keep our promises and meet our obligations to all of our insureds.[/FONT]
[FONT=Arial, Helvetica, sans-serif]As you are aware, we determined that the low interest rate environment has impacted our CareDirections Simplicity® product line that was priced in 2003 and launched in 2004 to the extent that a rate increase is necessary. While we initially exempted California’s Simplicity product from this rate action, further evaluation has indicated that rate action will also be necessary on the California product. As we do not want to be in the business of raising rates on products that are still on the market, we have decided to cease sale of CareDirections Simplicity in California, effective April 19, 2013.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Please keep in mind that MedAmerica’s FlexCare® product is available for sale in California, complete with the FlexCash® rider that offers your clients a 75% or 100% cash benefit for care in all settings except nursing home. MedAmerica is committed to promoting the FlexCare product.[/FONT]
[FONT=Arial, Helvetica, sans-serif]FAQ’s[/FONT]
[FONT=Arial, Helvetica, sans-serif]When will the cease sale of CareDirections Simplicity in California be effective?
MedAmerica will accept applications with signature dates through April 19, 2013, received at our home office by April 30, 2013. Please keep in mind that we continue to offer cash benefit options in California through our FlexCare® product. If you have an active or new Simplicity employer group case with eligible employees in the state of California, please contact your MedAmerica account executive.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Why not just raise rates in California without ceasing sale of the product?
We do not believe it is good business to sell a client a product one day and raise their rates the next and therefore, do not want to be in the business of raising rates on products that are currently being sold.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Is your actual claims experience worse than what you expected?
No. Our claims for CareDirections Simplicity are in line with assumptions. This rate increase has nothing to do with our claims experience. While higher than expected persistency is a factor in the need for this rate increase, the low interest rate environment is also a factor, affecting how much additional premium revenue must be generated in order to maintain proper claims reserves. That means the longer we expect people to pay premium (i.e. the younger the policyholder), the higher the increase we will require. For those people who are older, we will have a smaller amount of increase. For policyholders age 75 and older, we expect that rates will not increase at all.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Are you planning to raise rates on Simplicityii[SIZE=-2]SM[/SIZE]?
No. At this time, we have no plans to raise rates on our more recently priced products.[/FONT]
[FONT=Arial, Helvetica, sans-serif]What is your commitment to cash LTCi?
MedAmerica is 100% committed to cash LTCi. We still offer FlexCare featuring FlexCash in California which offers a 75% or 100% cash benefit for care received anywhere but in a nursing home.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Do you plan to cease sale of Simplicityii? No, not at this time. Our experience for our Simplicityii book of business is in line with pricing assumptions, and we are committed to continuing to offer 100% cash LTCi wherever possible.[/FONT]
Date:March 28, 2013RE:Cease Sale of CareDirections Simplicity® in California Effective April 19, 2013[FONT=Arial, Helvetica, sans-serif]At MedAmerica, we are 100% committed to cash LTCi as a viable consumer choice in the marketplace. Part of that commitment includes continually monitoring and evaluating policy performance in relation to economic conditions for all of our products, all of the time. This due diligence ensures we can keep our promises and meet our obligations to all of our insureds.[/FONT]
[FONT=Arial, Helvetica, sans-serif]As you are aware, we determined that the low interest rate environment has impacted our CareDirections Simplicity® product line that was priced in 2003 and launched in 2004 to the extent that a rate increase is necessary. While we initially exempted California’s Simplicity product from this rate action, further evaluation has indicated that rate action will also be necessary on the California product. As we do not want to be in the business of raising rates on products that are still on the market, we have decided to cease sale of CareDirections Simplicity in California, effective April 19, 2013.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Please keep in mind that MedAmerica’s FlexCare® product is available for sale in California, complete with the FlexCash® rider that offers your clients a 75% or 100% cash benefit for care in all settings except nursing home. MedAmerica is committed to promoting the FlexCare product.[/FONT]
[FONT=Arial, Helvetica, sans-serif]FAQ’s[/FONT]
[FONT=Arial, Helvetica, sans-serif]When will the cease sale of CareDirections Simplicity in California be effective?
MedAmerica will accept applications with signature dates through April 19, 2013, received at our home office by April 30, 2013. Please keep in mind that we continue to offer cash benefit options in California through our FlexCare® product. If you have an active or new Simplicity employer group case with eligible employees in the state of California, please contact your MedAmerica account executive.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Why not just raise rates in California without ceasing sale of the product?
We do not believe it is good business to sell a client a product one day and raise their rates the next and therefore, do not want to be in the business of raising rates on products that are currently being sold.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Is your actual claims experience worse than what you expected?
No. Our claims for CareDirections Simplicity are in line with assumptions. This rate increase has nothing to do with our claims experience. While higher than expected persistency is a factor in the need for this rate increase, the low interest rate environment is also a factor, affecting how much additional premium revenue must be generated in order to maintain proper claims reserves. That means the longer we expect people to pay premium (i.e. the younger the policyholder), the higher the increase we will require. For those people who are older, we will have a smaller amount of increase. For policyholders age 75 and older, we expect that rates will not increase at all.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Are you planning to raise rates on Simplicityii[SIZE=-2]SM[/SIZE]?
No. At this time, we have no plans to raise rates on our more recently priced products.[/FONT]
[FONT=Arial, Helvetica, sans-serif]What is your commitment to cash LTCi?
MedAmerica is 100% committed to cash LTCi. We still offer FlexCare featuring FlexCash in California which offers a 75% or 100% cash benefit for care received anywhere but in a nursing home.[/FONT]
[FONT=Arial, Helvetica, sans-serif]Do you plan to cease sale of Simplicityii? No, not at this time. Our experience for our Simplicityii book of business is in line with pricing assumptions, and we are committed to continuing to offer 100% cash LTCi wherever possible.[/FONT]
