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Long-Term Care Insurance (LTCI) - Shop for price?
Old 08-12-2008, 08:18 PM   #1
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Long-Term Care Insurance (LTCI) - Shop for price?

I was told by an insurance salesman in Ohio that anyone selling LTCI in Ohio charges the same rate for the same coverage--that commissions are standardized. Does this sound legit? If so, is there any point in shopping at more than one agent if the first guy carries all the brands in which you might be interested?
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Old 08-12-2008, 09:20 PM   #2
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Does this sound legit? If so, is there any point in shopping at more than one agent if the first guy carries all the brands in which you might be interested?
I'd guess I'd be more interested in the opinion of the insurance regulator.

Is the federal LTC insurance also priced at the same rate? That used to be more expensive but I don't know how pricing has moved over the last few years.
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Old 08-12-2008, 09:41 PM   #3
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Don't know about Ohio, but in California, each Company had differently priced plans.
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Old 08-12-2008, 11:38 PM   #4
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Curious.

I did find this that, while it doesn't call it out, does show that Ohio has a pretty involved LTC program:

Welcome to Ohio.gov - Partnership for Long-Term Care Insurance

Maybe call the Ohio Department of Insurance at 1-800-686-1578 (number at the bottom of that link).
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Old 08-13-2008, 03:42 AM   #5
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I doubt Ohio regulates the price. They may specify some set of features for a policy to be listed as an LTC policy (so people are not decieved and do not get ripped off).

You will find very few LTC policies that have the exact same terms and features... For example the terms on in-home care versus nursing home and the detailed rules.
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Old 08-13-2008, 10:42 AM   #6
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Samclem,

You stated, "I was told by an insurance salesman in Ohio that anyone selling LTCI in Ohio charges the same rate for the same coverage--that commissions are standardized. Does this sound legit? If so, is there any point in shopping at more than one agent if the first guy carries all the brands in which you might be interested?"

The reason you should shop and compare with more than one agent is because some agents may not be as knowledgeable as other agents.

I'll give you an example. Recently, a husband and wife had gotten some LTCi quotes and 3 different agents presented her and her husband with 3 different quotes from the exact same insurer--in her case the insurer was the (second largest long term care insurer). All 3 quotes varied A LOT. And the benefits seemed comparable to her so she was very confused.

What she didn't realize and what I explained to her is that this insurer offers 3 different LTCi policies. Each agent was quoting a different policy. The variance in premium from those 3 policies was astounding (for nearly identical benefits).

One quote was about $2,500 per year. Another quote was about $3,500 and another about $4,500.

All 3 quotes were accurate, but for whatever reason, two of the agents didn't fully understand which of the 3 policies offered by this insurer would be the best choice for this couple.

Regarding commissions, that has no impact on the premium you pay. If one agent makes x% commission and another agent, selling the same policy, makes y% commission, it does not change the premium that you pay.

What can save you a lot of money, though, is the knowledge and experience the agent has.


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Old 08-13-2008, 11:01 AM   #7
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Old 08-13-2008, 11:03 AM   #8
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Old 08-13-2008, 11:14 AM   #9
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Old 08-13-2008, 11:21 AM   #10
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As an aside, no animals were harmed or in danger of being harmed at any point during this thread. Specialists from the Beijing Olympics, fresh from their recent efforts were employed to both add the piece of image showing the hand and gun, and the dogs photo was altered to make it look a bit concerned.

Going back to the thread...

Sam, I dont know about your LTCI pricing, but a common play in sales is to tell someone they'll get the same price anywhere else. That reduces the chances that the customer will bother calling anyone else to nearly zero. Its particularly effective because most sales people will quote a list or common price to people cold calling them on the phone, so even if the customer does a 30 second due-diligence call they're probably going to hear the same or a higher price than you already quoted.
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Old 08-13-2008, 12:29 PM   #11
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I think the agent is blowing smoke up your... Shop around and see if you can find a decent agent first, then get into policy details.

Have you fully considered the risks and alternatives with LTC? I am not a big fan of the product.
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Old 08-13-2008, 04:11 PM   #12
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FYI

Many clients are seeing increases of 20 to 30% on their existing policies this year.

Seems like some of the actuaries didn't do their homework
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Old 08-13-2008, 06:54 PM   #13
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Seems like some of the actuaries didn't do their homework
Well, they'd invested the premiums in highly-liquid auction-rate securities...
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Old 08-13-2008, 08:25 PM   #14
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Thanks for the all the replies. I've got a little more info to share.

Quote:
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I think the agent is blowing smoke up your... Shop around and see if you can find a decent agent first, then get into policy details.

Have you fully considered the risks and alternatives with LTC? I am not a big fan of the product.
I agree--I'm not 100% sold on the whole idea of LTCi. On one hand, I don't think we can (realistically) self-insure for the entire amount we might face if one or both of us ends up in "the home," but I'm not in love with the products themselves. I think we're very likely to see rate increases and companies go out of business.

Yes, as we guessed, it appears the agent was not being entirely truthful regarding costs from various agents. USAA doesn't sell their own LTCi, but the serve as an agent for John Hancock and Genworth. USAA offers a 5% discount from the list rate for JH, no discount for Genworth. In our case, the JH policies were approx 20% less expensive than Genworth (same features in both). I don't know if this difference would be the same for all ages/rate classes. If I recall correctly, Brewer had good things to say about both companies (though not necessarily LTC as a product) and from what I've read, JH may have a slight edge in financial strength.


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Originally posted by Nords
Is the federal LTC insurance also priced at the same rate? That used to be more expensive but I don't know how pricing has moved over the last few years.
In our case, the USAA price for the JH policy was slightly (8%) less expensive than the price under the federal LTC program. I think this would probably differ according to the health status of the applicants, as the Federal program is a group policy and (as your Dad found out) if you are in a favorable underwriting class it is a few bucks cheaper to get a policy on your own. There are other differences: All the Federal policies are for one person without any sharing of benefits between people. On the other hand, if you buy from an agent or USAA, you can pay approx 20% more and get shared benefits for a married couple, which allows the entire dollar amount to be used by one or the other (even if one party dies first, the other gets the whole shared benefit--and the premiums for the deceased person's half of the coverage stop on his/her death). That seems to me to be a fairly important benefit, and might allow us to reduce the coverage amount (and the premiums). On the other hand, I sure like the idea of OPM and all those other federal retirees being in the boat with me if the company decides to raise rates or deny benefits. You don't get that protection if you're a lone wolf (I think the state insurance departments will roll over compliantly when the insurers come pleading for rate increases. The State has nothing to lose by granting rate increases and a LOT to lose in increased Medicaid claims if insurers go bust).

The policies under the federal program are issued by a partnership of MetLife and JH. Also, the Federal LTCi web page is way out of date concerning the "state partnership programs" and it is impossible to tell if the plans they offer are in compliance. I'm sure you can get one that is, but it's a shame they haven't done a better job of keeping their web page current on this important program.

If we do decide to buy LTCi we'll still self-insure to the max extent possible.
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Old 08-13-2008, 08:42 PM   #15
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If we do decide to buy LTCi we'll still self-insure to the max extent possible.
And we'll be watching your lead to see how it works out.

It still sticks in my craw to cough up (so to speak) years of premiums to avoid paying my own way in a full-care facility for 14 years like my grandfather. And I can't help but have the nagging feeling that 95% of the underwriters have underestimated their exposure. But gosh, maybe they've learned their lesson from the subprime statistics and this time it's really different.

And I'd hate to think that JG has wasted all of his unsolicited advice on 9mm ammunition.
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Old 08-14-2008, 03:36 AM   #16
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Better make sure that the LTC policy covers in-home care. That is what you want. If you go to a nursing home you can expect to be neglected.

The LTC is probably more about protecting assets for the surviving spouse. If you are penniless... Medicaid will pickup the tab.


The worse case scenario is if someone has a stroke, MS, or some sort of severe mobility problem. IMO if you need to go to a nursing home you are scr3wed! THe more help you need, the more likely the staff are to avoid you.

The wealthy do not go... they hire in-home care. Hire in-home care... you or your spouse will be much better off. The challenge is managing the situation.
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Old 08-14-2008, 06:11 AM   #17
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I think some states are standardizing the coverage - but not the price. So the state defines certain policy types - and a specific policy is exactly the same from all the insurance companies.

But the price, level of customer service, and company rating are all different.
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Old 08-14-2008, 09:46 PM   #18
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If I recall correctly, Brewer had good things to say about both companies (though not necessarily LTC as a product) and from what I've read, JH may have a slight edge in financial strength.

.
Both companies are solid IMO. Having said that, JH is owned by a gargantuan Canadian insurer called Manulife which has access to greater resources than Genworth. I would be comfy buying a policy from either company (credit-wise), but if everything were equal I would give it to JH.

But whoever you buy from will likely jam you with premium increases in the future, so if you do decide to buy this product, make sure you can afford the premiums with a 50% bump over what they quote you.
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