Re Genworth LTC Annuity

Hello Everyone,
I know Genworth and think they are a good company. Their premiums are by far the most competitive here in Ohio. I saw the new ltc annuity from them, and I had a few questions.
1. Regarding interest rates how competitive is this annuity?
2. How competitive is this amongst other annuities with ltc riders?
3. Is this something that will stay around, or is this a testing of a product? I don't want to recommend this to a client, to have Genworth pull out 3 years down the line.
4. Do you think rate increases for ltc benefits could rise faster given this annuity then with an average ltc policy from Genworth or Handcock?
5. Is this combo annuity competitve among premiums?
6. Do you think there will be a shared care rider?
7. Can only one spouse use the ltc rider benefits?
There will be more to come,
Thanks,
 
Hello Everyone,
I know Genworth and think they are a good company. Their premiums are by far the most competitive here in Ohio. I saw the new ltc annuity from them, and I had a few questions.
1. Regarding interest rates how competitive is this annuity?
2. How competitive is this amongst other annuities with ltc riders?
3. Is this something that will stay around, or is this a testing of a product? I don't want to recommend this to a client, to have Genworth pull out 3 years down the line.
4. Do you think rate increases for ltc benefits could rise faster given this annuity then with an average ltc policy from Genworth or Handcock?
5. Is this combo annuity competitve among premiums?
6. Do you think there will be a shared care rider?
7. Can only one spouse use the ltc rider benefits?
There will be more to come,
Thanks,

Personally I think standalone, "best of breed" products tend to represent a better value than linked benefit plans, but to each his own. Where Genworth or any carrier is going in the future is anyone's guess.

Like the life/ltc plans, these are individual plans...and all you can get is discounts for both applying. Nothing like a good traditional shared plan for many couples IMHO.

I would suggest you take a good look at Mutual of Omaha's LTC annuity as a comparison. They take a different approach, and you may or may not prefer it. I am hoping for a carrier to maybe be a little more forgiving on the underwriting on these annuities one day, but then again, I hope for lots of things.

I would expect more carriers to enter this market with the new tax laws.
 
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Which tax laws are you referring to? Underwriting is definitely something to take into consideration.
I always tell people, don't buy your life insurance from a health insurance company, and don't buy your health insurance from a life insurance company, so I agree stand alone plans are usually better.
 
Which tax laws are you referring to? Underwriting is definitely something to take into consideration.
I always tell people, don't buy your life insurance from a health insurance company, and don't buy your health insurance from a life insurance company, so I agree stand alone plans are usually better.

Pension Protection Act 2010 rules making LTC withdrawals from these LTC annuities a non-taxable event.
 
I will have more to posts shortly, but here is a recent Press Release:

From Genworth - A Less Painful Way to Buy LTC Insurance
Wed, Mar 31, 2010

Genworth Financial, Inc. has issued a long-term care/annuity hybrid product, joining the handful of companies who have take advantage of a provision in the Pension Protection Act of 2006, effective January 1 of this year, that resolves a tax technicality that barred such products in the past.

The Richmond, Va.-based insurers, new product, Total Living Coverage Annuity (TLCA) combines a single-premium fixed deferred annuity with long-term care coverage. It is underwritten by Genworth Life Insurance Company.

Like products announced last year by several companies (see RIJ, July 8, 2009, “A Short-Cut to Long-Term Care Insurance”), the product in effect allows owners of fixed annuities to withdraw the assets tax-free when applying them to long-term care costs. The cost of long-term care insurance is greatly reduced because the fixed annuity assets serve as a very large deductible. Genworth introduced a universal life insurance/LTC hybrid a few years ago.

The product, whose market consists of the estimated $96 billion in out-of-surrender-period fixed annuity assets in the U.S., will mainly save money for people with significant unused capital who would otherwise self-insure against the risk of incurring long-term nursing home or home health care costs.

Katie Liebel, vice president of linked benefit products, described how the new hybrid works. If an investor put $100,000 into the new product for instance, he or she choose $200,000 or $300,000 worth of long-term care coverage, spread over a period of four or six years, she said. Inflation-adjustment is available as an option.

“Only seven percent of the people who are looking for long-term care insurance actually purchase it, and the other 93% are self-insuring,”Liebel said. “This allows them to self-insure more effectively.

The product, which can be funded with assets from another annuity or life insurance policy, has a minimum premium of $35,000. Once invested, the money earns 3.25% (with a minimum guarantee of 3%) or as much as 3.65% if the premium is $150,000 or more.

As the assets grow, the issuer assesses an insurance charge of between 0.40% and 1.5% on the insurer's exposure. The expense ratio depends on the amount of coverage purchased as well as the age and health of the purchaser. Liebel described the underwriting as “simplified, with no lab tests or review of doctors' records.”

Over time, the annuity would grow and the insurer's exposure would shrink, resulting in a steady decline in fees. The annuity owner could withdraw money from the contract, but doing so would cause a proportionate reduction in the amount of LTC coverage.

Many existing annuity contracts allowed accelerated payouts for nursing home costs, but the distributions are not tax-free, as they are when combined with long-term care insurance.
- - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - -
Typical Client Profile

· Aged 55 – 75 years old
· Retired or nearing retirement
· Investable assets of $200,000 or more (excluding home and qualified accounts)
· Currently self-insuring against risks of a future long term care event

Asset Repositioning Opportunities

· Non-Qualified Fixed Annuities
· Out of surrender charge period
· Account value may include substantial gains, which could be used to fund LTC expenses tax free
- - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - -
Hello Everyone,
I know Genworth and think they are a good company. Their premiums are by far the most competitive here in Ohio. I saw the new ltc annuity from them, and I had a few questions.
1. Regarding interest rates how competitive is this annuity?
2. How competitive is this amongst other annuities with ltc riders?
3. Is this something that will stay around, or is this a testing of a product? I don't want to recommend this to a client, to have Genworth pull out 3 years down the line.
4. Do you think rate increases for ltc benefits could rise faster given this annuity then with an average ltc policy from Genworth or Handcock?
5. Is this combo annuity competitve among premiums?
6. Do you think there will be a shared care rider?
7. Can only one spouse use the ltc rider benefits?
There will be more to come,
Thanks,

1. Regarding interest rates how competitive is this annuity?
Genworth's TLCA is competitive with 1st year rates crediting in between 3.25% and 4.05% depending on the Premium Band and State of Ownership, and the minimum guarantee for all years after year 1 is 3.00%.

2. How competitive is this amongst other annuities with ltc riders?
State Life/One America and Mutual of Omaha/Living Care are 3.00% in year 1 and minimum 3.00% after that.

3. Is this something that will stay around, or is this a testing of a product? I don't want to recommend this to a client, to have Genworth pull out 3 years down the line.
Genworth is in this for the long haul. They have been working on linked benefit products since The Pension Protection was created in 2006.

4. Do you think rate increases for benefits could rise faster given this annuity then with an average policy from Genworth or Handcock?
Genworth has experienced one rate increase on their LTC products in the last 35 years. Genworth has been in the LTC business longer than any other company and has significant data to help them price each product accordingly. The one rate increase that Genworth experienced was approximately 10-12% while their competitors were experiencing 20-40% increases.

5. Is this combo annuity competitve among premiums?
Yes, but keep in mind it you have to compare apples to apples. A combo product can be compared to other combo products, and not necessarily compared to a stand alone policy. You have to decide which strategy is best for your client and then compare.

6. Do you think there will be a shared care rider?
They do not have joint annuitants on their product at this time. One of State Life's products allows joint annuitants while the other one does not.

7. Can only one spouse use the ltc rider benefits?
Yes, only one spouse can use the LTC rider benefits. So, let's say you have a husband and wife with $300K+ in non-qualified money set aside for a possible LTC event in non-qualified annuities. You can carve out $150K and buy two $75K TLCA contracts (one for each of them). If you do not choose inflation protection and you choose 6 years of LTC coverage, then you can leverage each contract up to 3x (i.e. $225K level LTC benefit). This is very powerful.

Mutual of Omaha / Genworth


- 3X leverage is the only option for M of O (which may or may not be more expensive than lower leverage options with GNW).

- M of O owners that purchase the inflation protection rider (5% COLA) are required to add additional premiums each year for the option.


- M of O is currently offering a crediting rate equal to the min floor = 3%. No jumbo rates, no first year bonus rate like GNW.


- 2 year deferral period on M of O vs. while GNW has a 1 year deferral period in 35 states and a 2 year deferral period in TX, CA, IL & TN.


- 90 day elimination period for both facility & in home care on M of O, but (GNW has 0 day elim for in home care in 35 states - not TX, CA, IL & TN).


- It has been said that GNW underwriting process is more simplified than M of O.
 
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Is it possible to have a different FMO for this product. My existing FMO has never told me about this and about 6 months ago I called them and they still didn't know anything about it. This from one of the largest FMO's in the country!
 
I will have more to posts shortly, but here is a recent Press Release:

From Genworth - A Less Painful Way to Buy LTC Insurance
Wed, Mar 31, 2010

Genworth Financial, Inc. has issued a long-term care/annuity hybrid product, joining the handful of companies who have take advantage of a provision in the Pension Protection Act of 2006, effective January 1 of this year, that resolves a tax technicality that barred such products in the past.

The Richmond, Va.-based insurers, new product, Total Living Coverage Annuity (TLCA) combines a single-premium fixed deferred annuity with long-term care coverage. It is underwritten by Genworth Life Insurance Company.

Like products announced last year by several companies (see RIJ, July 8, 2009, “A Short-Cut to Long-Term Care Insurance”), the product in effect allows owners of fixed annuities to withdraw the assets tax-free when applying them to long-term care costs. The cost of long-term care insurance is greatly reduced because the fixed annuity assets serve as a very large deductible. Genworth introduced a universal life insurance/LTC hybrid a few years ago.

The product, whose market consists of the estimated $96 billion in out-of-surrender-period fixed annuity assets in the U.S., will mainly save money for people with significant unused capital who would otherwise self-insure against the risk of incurring long-term nursing home or home health care costs.

Katie Liebel, vice president of linked benefit products, described how the new hybrid works. If an investor put $100,000 into the new product for instance, he or she choose $200,000 or $300,000 worth of long-term care coverage, spread over a period of four or six years, she said. Inflation-adjustment is available as an option.

“Only seven percent of the people who are looking for long-term care insurance actually purchase it, and the other 93% are self-insuring,”Liebel said. “This allows them to self-insure more effectively.

The product, which can be funded with assets from another annuity or life insurance policy, has a minimum premium of $35,000. Once invested, the money earns 3.25% (with a minimum guarantee of 3%) or as much as 3.65% if the premium is $150,000 or more.

As the assets grow, the issuer assesses an insurance charge of between 0.40% and 1.5% on the insurer's exposure. The expense ratio depends on the amount of coverage purchased as well as the age and health of the purchaser. Liebel described the underwriting as “simplified, with no lab tests or review of doctors' records.”

Over time, the annuity would grow and the insurer's exposure would shrink, resulting in a steady decline in fees. The annuity owner could withdraw money from the contract, but doing so would cause a proportionate reduction in the amount of LTC coverage.

Many existing annuity contracts allowed accelerated payouts for nursing home costs, but the distributions are not tax-free, as they are when combined with long-term care insurance.
- - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - -
Typical Client Profile

· Aged 55 – 75 years old
· Retired or nearing retirement
· Investable assets of $200,000 or more (excluding home and qualified accounts)
· Currently self-insuring against risks of a future long term care event

Asset Repositioning Opportunities

· Non-Qualified Fixed Annuities
· Out of surrender charge period
· Account value may include substantial gains, which could be used to fund LTC expenses tax free
- - - - - - - - - - - - - - - - - -
- - - - - - - - - - - - - - - - - -


1. Regarding interest rates how competitive is this annuity?
Genworth's TLCA is competitive with 1st year rates crediting in between 3.25% and 4.05% depending on the Premium Band and State of Ownership, and the minimum guarantee for all years after year 1 is 3.00%.

2. How competitive is this amongst other annuities with ltc riders?
State Life/One America and Mutual of Omaha/Living Care are 3.00% in year 1 and minimum 3.00% after that.

3. Is this something that will stay around, or is this a testing of a product? I don't want to recommend this to a client, to have Genworth pull out 3 years down the line.
Genworth is in this for the long haul. They have been working on linked benefit products since The Pension Protection was created in 2006.

4. Do you think rate increases for benefits could rise faster given this annuity then with an average policy from Genworth or Handcock?
Genworth has experienced one rate increase on their LTC products in the last 35 years. Genworth has been in the LTC business longer than any other company and has significant data to help them price each product accordingly. The one rate increase that Genworth experienced was approximately 10-12% while their competitors were experiencing 20-40% increases.

5. Is this combo annuity competitve among premiums?
Yes, but keep in mind it you have to compare apples to apples. A combo product can be compared to other combo products, and not necessarily compared to a stand alone policy. You have to decide which strategy is best for your client and then compare.

6. Do you think there will be a shared care rider?
They do not have joint annuitants on their product at this time. One of State Life's products allows joint annuitants while the other one does not.

7. Can only one spouse use the ltc rider benefits?
Yes, only one spouse can use the LTC rider benefits. So, let's say you have a husband and wife with $300K+ in non-qualified money set aside for a possible LTC event in non-qualified annuities. You can carve out $150K and buy two $75K TLCA contracts (one for each of them). If you do not choose inflation protection and you choose 6 years of LTC coverage, then you can leverage each contract up to 3x (i.e. $225K level LTC benefit). This is very powerful.

Mutual of Omaha / Genworth


- 3X leverage is the only option for M of O (which may or may not be more expensive than lower leverage options with GNW).

- M of O owners that purchase the inflation protection rider (5% COLA) are required to add additional premiums each year for the option.


- M of O is currently offering a crediting rate equal to the min floor = 3%. No jumbo rates, no first year bonus rate like GNW.


- 2 year deferral period on M of O vs. while GNW has a 1 year deferral period in 35 states and a 2 year deferral period in TX, CA, IL & TN.


- 90 day elimination period for both facility & in home care on M of O, but (GNW has 0 day elim for in home care in 35 states - not TX, CA, IL & TN).


- It has been said that GNW underwriting process is more simplified than M of O.


Unless I mis-read the announcement today, the sale of these GNW annuity/LTC products is being suspended effective 2/7/11 "until the market develops" . The life/LTC products will stay.
 
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