Oxford Declined Question

[VolAgent]

You're way off. You left out the truckloads of interest the carrier is making on assets. You also left out the lapses after one year. Then factor in the long livers that end up paying in more premium than the policy is worth.

A few bad assumptions there. First, you have to have money to get interest. They are actually losing money in the first year of the policy. So that touches on point two, a lapse just after the first year is a killer. They just got done buying the policy and are still in the hole. Anything lapsing before year 3 or 4 is almost certainly a loss.

But yes, people who do keep it for a long period are definitely profitable.

 

[donamese]

There is no advocate here, just pointing out the facts. Your numbers are wrong, I had 120 and 10% renewals 2-10 about 5 years ago.

I stated what STREET commission was and is now. You were obviously on a higher level contract which means you would be at even higher levels now (assuming you stayed contracted and they didn't reduce your level). Following the same changes as street it would be like 135 8 5 now which would still work out just as I stated previously. So where exactly was I wrong here?

 

[smokin goose]

A few bad assumptions there. First, you have to have money to get interest. They are actually losing money in the first year of the policy. So that touches on point two, a lapse just after the first year is a killer. They just got done buying the policy and are still in the hole. Anything lapsing before year 3 or 4 is almost certainly a loss. But yes, people who do keep it for a long period are definitely profitable.

I'm talking about their whole pool of assets. The big picture, not just one policy.

 

[donamese]

A few bad assumptions there. First, you have to have money to get interest. They are actually losing money in the first year of the policy. So that touches on point two, a lapse just after the first year is a killer. They just got done buying the policy and are still in the hole. Anything lapsing before year 3 or 4 is almost certainly a loss.

But yes, people who do keep it for a long period are definitely profitable.

Exactly. And while compounding interest builds quick with a single premium policy, it doesn't accrue nearly as fast when you begin with $30/mo in the bank.

 

[VolAgent]

I'm talking about their whole pool of assets. The big picture, not just one policy.

While that is true, you still need to write individuals policies with an eye for profit. As a company, you can't just throw stuff against the wall and see what sticks. You need to have developed a product to be profitable and underwrite with an eye for being profitable. You never know which policy is going to be a money loser or maker, but you should be writing with the idea that as an aggregate they are.

Early lapses are a pure drain on profit. That is why companies have to watch persistency, some lapses will happen, but the majority of the business has to stick. Good companies are just as interested in month 25 as month 13. That is when policies start to generate money and build reserves for claims.

While I am not a fan of the "Have you been declined?" question being used to decline, I get it. No company wants to be the last one invited to the dance. Constantly getting other companies' rejects is an easy way to build an unhealthy book.

 

[jdeasy]

While that is true, you still need to write individuals policies with an eye for profit. As a company, you can't just throw stuff against the wall and see what sticks. You need to have developed a product to be profitable and underwrite with an eye for being profitable. You never know which policy is going to be a money loser or maker, but you should be writing with the idea that as an aggregate they are.

Early lapses are a pure drain on profit. That is why companies have to watch persistency, some lapses will happen, but the majority of the business has to stick. Good companies are just as interested in month 25 as month 13. That is when policies start to generate money and build reserves for claims.

While I am not a fan of the "Have you been declined?" question being used to decline, I get it. No company wants to be the last one invited to the dance. Constantly getting other companies' rejects is an easy way to build an unhealthy book.

It's pretty obvious that the insurance companies, just like the casinos in Vegas, are losing money.

I used a Travis Tubbs line yesterday in replacing a policy that had $800 cash value in it, "the insurance company has enough money".

Fortunately for me the lady doesn't read the insurance forums. She agreed with that statement.

 

[VolAgent]

It's pretty obvious that the insurance companies, just like the casinos in Vegas, are losing money.

I used a Travis Tubbs line yesterday in replacing a policy that had $800 cash value in it, "the insurance company has enough money".

Fortunately for me the lady doesn't read the insurance forums. She agreed with that statement.

Point out where I said they are losing money.

 

[gordon112]

I stated what STREET commission was and is now. You were obviously on a higher level contract which means you would be at even higher levels now (assuming you stayed contracted and they didn't reduce your level). Following the same changes as street it would be like 135 8 5 now which would still work out just as I stated previously. So where exactly was I wrong here?

The fact is they lowered the renewals half what they used to. They have questions that aren't on any FE ap. The POS interview is crazy long. The rates aren't much better then anybody else and at some ages are higher.

Hey, Oxford isn't the worst out there, some of what they do isn't bad. I don't mind the home office support (unless it has gotten worse), the rates are solid, and they do offer some other niche products.

 

[donamese]

The fact is they lowered the renewals half what they used to. They have questions that aren't on any FE ap. The POS interview is crazy long. The rates aren't much better then anybody else and at some ages are higher.

If you are looking at years 6-10 and ignoring the 15% increase in the first year then you are absolutely correct and I am wrong.

Never refuted their unique questions. As I stated before, I am not a huge fan of the declined in the past 2 yrs but I get it. Was simply stating that there is a reason behind it and it takes a few years to see if it actually negates bad risk or loses good sales. The other one they used to have was a disability in the past 6 months. Wasn't very well defined and knocked out a lot of good clients, but I am sure also removed some bad risk...they eventually removed that question.

 

[gordon112]

If you are looking at years 6-10 and ignoring the 15% increase in the first year then you are absolutely correct and I am wrong.

Never refuted their unique questions. As I stated before, I am not a huge fan of the declined in the past 2 yrs but I get it. Was simply stating that there is a reason behind it and it takes a few years to see if it actually negates bad risk or loses good sales. The other one they used to have was a disability in the past 6 months. Wasn't very well defined and knocked out a lot of good clients, but I am sure also removed some bad risk...they eventually removed that question.

If they where only offering 105 in the past, I see your point. I was always higher then that with Oxford, so for me it was a no brain er to drop them since the renewals are crap now along with the crappy UW. Americo pays me a ton up front and a lot the next year, then it drops to crap. That at least is a better deal for the agents that don't care about renewals and want to build up a much better income. I like a combo of both.

RNA did the same recently, but worse they increased rates that are now rarely in the ballpark. Do I use them now? Only if I run into certain scenarios that would warrant.