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Physicians Mutual Insurance
Old 08-02-2005, 08:03 PM   #1
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Physicians Mutual Insurance

My husband and I have reviewed a number of LTC policies and we intend to purchase one very soon. The one from Physicians Mutual is the least expensive, but I am comparing the same selection of benefits for all of them. The company is rated well by the insurance raters.

Does anyone have experience with this company? Does anyone have a warning for us about why they might be so much less expensive? Thanks in advance!
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Re: Physicians Mutual Insurance
Old 08-02-2005, 08:21 PM   #2
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Re: Physicians Mutual Insurance

Insurance works by pooling your LTC result with other people who also buy that policy from that company in your state this year. If that group of people have more losses than contemplated the rates will go up. If losses are lower, then they will stay level. I would ask the person selling the policy how much rates have increased for the policies they sold in your state in 2002, 2003. The 02 pool has had two plus years, and the 03 pool one year. If they did a good job rates will not have gone up much. If the 02 rates are much higher, they have lowballed their initial pricing. This approach can be used as far back as the company sold policies in your state......
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Re: Physicians Mutual Insurance
Old 08-02-2005, 08:28 PM   #3
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Re: Physicians Mutual Insurance

Thanks, Steve, I will ask that question. My concern actually was that the lower priced policy may be poised for a big hike.
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Re: Physicians Mutual Insurance
Old 08-02-2005, 08:38 PM   #4
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Re: Physicians Mutual Insurance

Physicians Mutual is highly rated and has a good reputation. With LTC insurance, rate increases after a number of years, unfortunately, is the norm, and I would not be surprised to see Physicians Mutual raise their rates on in-force business in the future. (The only LTCI company I know of that has never raised its rates on in-force business is GE (Genworth), and possibly John Hancock).

You might want to ask someone at their home office how long they've been selling LTCI, and whether or not they've ever raised rates on in-force business.

There are two ways companies offer extremely low rates: lowballing (using aggressive assumptions on lapse ratios and post-claims medical underwriting to generate ridiculously low rates, knowing they will jack them up in the future)...

or brutally tough medical underwriting. I don't know how else it can be done. I don't believe Physicians Mutual lowballs its rates- it's too much of a class act. So I'm guessing that they are tough in their underwriting- declining or rating applicants with medical histories that other carriers would accept standard or preferred.

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Re: Physicians Mutual Insurance
Old 08-03-2005, 08:20 AM   #5
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Re: Physicians Mutual Insurance

Quote:
Originally Posted by Art
The only LTCI company I know of that has never raised its rates on in-force business is GE (Genworth), and possibly John Hancock
We have had LTC policies from CNA for eight years. No premium increases so far. We got the policies at age 50 so they were very reasonable - less than $1600/yr. for both. Coverage is $100/day with 5% escalation, 180 day exclusion and no lifetime limit. I believe I read that CNA is no longer writing new LTC policies

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Re: Physicians Mutual Insurance
Old 08-03-2005, 08:39 AM   #6
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Re: Physicians Mutual Insurance

Grumpy, we have CNA LTC policies as well, and they have a 10 year guarantee of premium. Wonder if that's why you haven't seen an increase?

In addition to no longer writing new LTC policies, I've heard CNA has increased premiums in some states as much as 50%. Our guarantee period is up in 4 years and I'm expecting a big hit. If my pessimistic expectations are met, I may drop coverage on one of us or reduce the coverage on both policies to keep them affordable, assuming I have the option to do so.

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Re: Physicians Mutual Insurance
Old 08-03-2005, 09:23 AM   #7
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Re: Physicians Mutual Insurance

Quote:
Originally Posted by REWahoo!
Grumpy, we have CNA LTC policies as well, and they have a 10 year guarantee of premium. Wonder if that's why you haven't seen an increase?
REWahoo!,

I just pulled out my CNA LTC policy document. I don't see anything about 10 year guarantee of premium. There is a section that is headed: "Guaranteed Renewable for Life/Premiums Subject to Change". It says: " We cannot change Your Policy without your consent. However, We may change the premium rates. Any change will apply to all policies in the same class as Yours in the state where the policy was issued." My policy was issued in the state of Maryland. Perhaps your state has differnt regs. I have since moved to Virginia. I wonder if that will have any effect. I think this all means that they could increase the premiums at any time. So far, they have not. I'll keep my fingers crossed. In any case, if they increase the premiums by 50% they would still be lower than a new policy with equivalent benefits would cost us.

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Re: Physicians Mutual Insurance
Old 08-03-2005, 09:55 AM   #8
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Re: Physicians Mutual Insurance

Quote:
Originally Posted by grumpy
There is a section that is headed: "Guaranteed Renewable for Life/Premiums Subject to Change". It says: " We cannot change Your Policy without your consent. However, We may change the premium rates. Any change will apply to all policies in the same class as Yours in the state where the policy was issued." My policy was issued in the state of Maryland. Perhaps your state has differnt regs.
My policy has the same provision as you state above. The 10 year guarantee of premium is a "rider" on the policy. I'm sure we are paying some additional amount in our premium for the guarantee, although there is no itemization of what is included in the premium. As if anyone would be surprised by that...

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Re: Physicians Mutual Insurance
Old 08-03-2005, 11:53 AM   #9
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Re: Physicians Mutual Insurance

REWahoo! and Grumpy,

Like many LTCI companies, CNA lost a ton of money on its LTCI block and got out of the business. There have been many CNA rate hikes on various blocks of in-force LTCI business. I was sorry to see them go, as I sold a lot of their LTCI (they were one of the first name companies in the business, and they were the only good company that sold stand-alone Home Health Care LTCI- which I never recommended, but many people demanded. Today, Physicians Mutual is the only company I know of that sells stand-alone Home Health Care LTCI.) CNA paid one of the four LTCI claims my clients received, totalling well over $1,000,000- GE paid the other three.

Moving to another state will have no impact whatsoever on your LTCI... unless... your policy is a "Partnership" policy, which is sold in California, New York, I think Illinois, and I forget the fourth state. These policies are joint ventures between these states and six specific LTCI companies, and provide special MediCal/Medicaid estate recovery protection for owners who exhaust their policy benefits- but even if a California Partnership LTCI owner moved out of California, s/he would still enjoy all of the benefits of the policy in his new state except for the special Medical/Medicaid sweetener, which traditional LTCI policies don't have either.

It is safe to assume for both of you that there is a CNA LTCI rate hike in your futures, but you will still come out ahead relative to your non-insured peers first buying a policy at the time of your rate hike, especially if you have either simple or compound COLA increases on your daily benefits.

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Re: Physicians Mutual Insurance
Old 08-03-2005, 03:08 PM   #10
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Re: Physicians Mutual Insurance

In 2004, at 57, I got Unum Provident. My LTC budget factors in a 20% increase every 4 years although the agent told me that they haven't had a premium increase to existing customers for over 8 years. For me LTCI has a border line benefit. If the rates were to go out of wack then I might just drop it and consider my past premiums as a loss. Starting next year, because of my lower tax bracket, i'll be getting about $300 back from my LTC deduction.
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