The End of Simplicity

[Arthur Rudnick]

It was just announced that MedAmerica is pulling their Simplicity product from all states, effective 10/11.

A cash-benefit policy is still available from MedAmerica with their Flex-Cash policy.

Flex-Cash will cost approximately 20%-30% higher than Simplicity.

Let the fire-sale begin.

 

[csalter]

It was just announced that MedAmerica is pulling their Simplicity product from all states, effective 10/11.

A cash-benefit policy is still available from MedAmerica with their Flex-Cash policy.

Flex-Cash will cost approximately 20%-30% higher than Simplicity.

Let the fire-sale begin.

I strongly considered them. I liked their cash benefit and you could pay anyone, but I noticed they were increasing rates and asking for more and I thought I would be seeing more of it.

Question: When insurance companies decide to not sell a product anymore, does that lessen the probaility of them increasing their rates for that policy in the future?

 

[Justin Bilyj]

Hey Art,
Is it cash products you see this happening with?

 

[Arthur Rudnick]

previously posted by emptyeternity

Hey Art,
Is it cash products you see this happening with?

Not necessarily..............
MedAmerica's Simplicity product has been way under-priced for a long time. Over a year ago they inroduced Flex Care, which offers a 100% cash option.

Rather than continue with Simplicity, once Flex Care was available in all states, it was discontinued. Flex Care is a reimbursement policy (which MedAmerica hasn't had for years) with an option for 100% cash. So, at the end of the day, no more Simplicity, but Flex Care, a cash option costing 20%-30% more.

Mutual of Omaha & TransAmerica still offers a cash option of up to 50% of the monthly benefit.

 

[billberry12]

"Question: When insurance companies decide to not sell a product anymore, does that lessen the probaility of them increasing their rates for that policy in the future? "

In my experience, that has proven to be true.

 

[Arthur Rudnick]

previously posted by billberry12

"Question: When insurance companies decide to not sell a product anymore, does that lessen the probabilty of them increasing their rates for that policy in the future? "
In my experience, that has proven to be true.

Not sure Bill.........
I can give you many examples of policies being taken off sale and hit with rate increases down the road.

If those policies were not actuarilly sound to begin with (and most were not) rate increases are the only way for the company to increase their Reserves on that particular block of business.

Now with that said, MedAmerica claims that there was nothing wrong with the rates & assumptions of Simplicity. But, after 3 or 4 years without a rate increase on an existing policy, they had a choice of introducing "Simplicity3" with higher rates, or focusing on Flex-Care (Flex-Cash), which is higher priced than Simplicity was.

In essense they solved 2 problems by bailing on Simplicity:
1) Removed a product that was under-priced and due for a rate increase on new applicants, and
2) Introduced a new generation policy which serves for both reimbursement & cash.

I think you'll find their reimbursementt policy "competitively priced" and Flex-Cash more expensive.

But, a cash-benefit policy should be more expenseive than a reimbursment policy.

Just my opinion.............

 

[ltcadviser]

The only impact I see with this news is no more home for insulin dependent diabetics with 50-70 units.

 

[Mr_Ed]

The only impact I see with this news is no more home for insulin dependent diabetics with 50-70 units.

lifesecure
state life

 

[ltcadviser]

lifesecure
state life

Yes, true. I am comfortable with State Life's hybrids.