Genworth LTC strikes again

[capjak]

If you go with the OneAmerica, I'd do a 20pay instead of a single-pay?

With NGL why not do a 10pay instead of a single pay?

Why 20 pay? I think it is about an IRR of 3%?

Should of stated previously that there are options for One America at 10 year pay, 20 year pay and lifetime pay in addition to a single premium all with zero increase

 

[Banned LTC Salesman]

Why 20 pay? I think it is about an IRR of 3%?

Should of stated previously that there are options for One America at 10 year pay, 20 year pay and lifetime pay in addition to a single premium all with zero increase

I don't pay attention to IRR. It's just an insurance industry construct to make people think that permanent life insurance is a "good investment". It's not.

Ignore IRR. Ignore the "credited interest rate" because after fees it's usually negative or less than 1%.

20pay is better than single-pay because with single-pay you lose the earnings you would have earned on the single-premium.

20pay is better than lifepay because the lifepay premium remains the same when one spouse passes away.

Plus, with the 20pay you'll have a better opportunity to take advantage of the LTCi tax deduction. (The base premium is not tax deductible but the COB rider is tax deductible.)

 

[MooreBonds]

It amazes me that when LTCi became a thing, regulators did not recognize this problem and use the same solution that worked for life insurance. But, they didn't.

LTCi is a much more difficult product to price - it's more akin to health insurance coverage (highly variable expenditure that is a little harder to predict for a given cohort) than life insurance (a much easier number to average/predict). Being wrong on 10% of the insureds with life insurance might mean the average lifespan turned out to be 73 instead of 75 (you still have to pay the face value of the policy, but it only goes out the door a few years earlier than forecasted): being wrong on 10% of the insureds with LTCi might mean a whole lot more $ out the door than what you predicted.

Plus, throw in the fact that the CEOs probably didn't want to be the last to the LTC market sales growth party, and miss out on growing total premiums at a healthy clip for their [-]annual bonuses[/-] shareholders. Since LTC would start to make claims in 20-30 years, they were less inclined to have a more accurate estimation in hand when pricing things up, since they would likely be long-gone by that time. That, and they can always raise rates later on if need be.

 

[Banned LTC Salesman]

LTCi is a much more difficult product to price - it's more akin to health insurance coverage (highly variable expenditure that is a little harder to predict for a given cohort) than life insurance (a much easier number to average/predict). Being wrong on 10% of the insureds with life insurance might mean the average lifespan turned out to be 73 instead of 75 (you still have to pay the face value of the policy, but it only goes out the door a few years earlier than forecasted): being wrong on 10% of the insureds with LTCi might mean a whole lot more $ out the door than what you predicted.

Plus, throw in the fact that the CEOs probably didn't want to be the last to the LTC market sales growth party, and miss out on growing total premiums at a healthy clip for their [-]annual bonuses[/-] shareholders. Since LTC would start to make claims in 20-30 years, they were less inclined to have a more accurate estimation in hand when pricing things up, since they would likely be long-gone by that time. That, and they can always raise rates later on if need be.

All very true. Fortunately, there's about 17x more claims data now than there was in 2001.

The biggest surprise, really, was the lapse rate. The insurers thought the lapse rate would be similar to whole life insurance. It wasn't. There's never been an insurance product with such a low lapse rate. The people who want long-term care insurance REALLY want it and hang onto it.

 

[mf15]

Perhaps there is another reason people hang on to the insurance. My other option is to stop paying premiums. When needed then they will pay out the 30,000 the wife put in so far.
Now, what might happen if they just gave that 30K back to you in cash. Would people
take it an run. Not sure.
oldmike

 

[HI Bill]

The people who want long-term care insurance REALLY want it and hang onto it.

In my Mom's case, she did not have enough income/assets to pay for it until it was likely needed (in her case, the age was 80.5). So, after months of trying, I finally convinced her to drop it. The irony was, that she wanted the coverage, but DID NOT WANT to live in a nursing or assisted living home. After breaking her pelvis and ending up in the hospital, then rehab, then a memory care unit,. she just stopped eating. She lived just shy of 7 weeks from the day she fell at her home. Here LTC costs were $10K.

I personally cannot understand anyone who plans to live in a nursing home...send me out to pasture or sea, please. I know there are plenty of folks to don't seem to mind the idea. I'd suggest a visit to a local nursing or memory care unit, and have a few meals there before you pay for an end you may regret.

 

[Independent]

LTCi is a much more difficult product to price - it's more akin to health insurance coverage (highly variable expenditure that is a little harder to predict for a given cohort) than life insurance (a much easier number to average/predict). Being wrong on 10% of the insureds with life insurance might mean the average lifespan turned out to be 73 instead of 75 (you still have to pay the face value of the policy, but it only goes out the door a few years earlier than forecasted): being wrong on 10% of the insureds with LTCi might mean a whole lot more $ out the door than what you predicted.

Plus, throw in the fact that the CEOs probably didn't want to be the last to the LTC market sales growth party, and miss out on growing total premiums at a healthy clip for their [-]annual bonuses[/-] shareholders. Since LTC would start to make claims in 20-30 years, they were less inclined to have a more accurate estimation in hand when pricing things up, since they would likely be long-gone by that time. That, and they can always raise rates later on if need be.

I agree with the second paragraph. The same dynamic was true for permanent life insurance. Legislators found a way to shut it down for permanent life insurance. I'm saying they already had the template, they should have used it for LTCi.

Re the first paragraph, yes, LTCi was harder to price than life insurance. But, it's not as bad as medical. With Medical, the company is on the hook for medical expense inflation. LTCi daily benefits are capped.

 

[Banned LTC Salesman]

I personally cannot understand anyone who plans to live in a nursing home...send me out to pasture or sea, please. I know there are plenty of folks to don't seem to mind the idea. I'd suggest a visit to a local nursing or memory care unit, and have a few meals there before you pay for an end you may regret.

Most people who need long term care never step foot in a nursing home. For every 4 people receiving care in a nursing home there are 30 people receiving care at home. In other words, for every CAR load of nursing home residents there's a BUS load of home care recipients.

4 out of every 5 long term care insurance claims start at home. 3 out of every 5 long term care insurance claims end at home.

 

[Marita40]

I agree about the in-home care. That's a major part of why I hold onto my LTC policy. As a single person I have NO ONE to care for me if I get a disability or fall ill (although I am sure a bevy of friends would step up for the short term).

I hate it, but I hate insurance premiums in general. Grit teeth each year and send in the check.

 

[athena53]

Plus, throw in the fact that the CEOs probably didn't want to be the last to the LTC market sales growth party, and miss out on growing total premiums at a healthy clip for their [-]annual bonuses[/-] shareholders. Since LTC would start to make claims in 20-30 years, they were less inclined to have a more accurate estimation in hand when pricing things up, since they would likely be long-gone by that time. That, and they can always raise rates later on if need be.

This. LTC is what we always called "long-tail business" on the property-casualty side. You collect the premiums now but it might be decades before you know the ultimate cost of the product. One cynical actuarial colleague said we should claw back bonuses from the underwriters who brought in the business if it turns sour years later.

 

[RetiredAt55.5]

I personally cannot understand anyone who plans to live in a nursing home...send me out to pasture or sea, please. I know there are plenty of folks to don't seem to mind the idea. I'd suggest a visit to a local nursing or memory care unit, and have a few meals there before you pay for an end you may regret.

That seems a little harsh to say "I cannot understand anyone ....".


But, I wouldn't want to live like this either. Someone mentioned knowing an 85 year old with macular degeneration. That would be hell on earth for me.


I dunno, talk is cheap and my tune might very well change in 30 years. I may lose my license, but I'm keeping 1 car in the garage and a long hose (for the tailpipe) as my LTC plan.

 

[samclem]

What makes you think they can raise your rates as you get older?

It seems like the majority of policyholders who purchased more than 10 years ago have seen rate increases. Often hefty ones. That might not be >because< they got older, but it is certainly true that they are older.

 

[Scuba]

Are you saying that "divorce" is the option?

Yes, it worked for my in-laws.

 

[MrLoco]

In my Mom's case, she did not have enough income/assets to pay for it until it was likely needed (in her case, the age was 80.5). So, after months of trying, I finally convinced her to drop it. The irony was, that she wanted the coverage, but DID NOT WANT to live in a nursing or assisted living home. After breaking her pelvis and ending up in the hospital, then rehab, then a memory care unit,. she just stopped eating. She lived just shy of 7 weeks from the day she fell at her home. Here LTC costs were $10K.

I personally cannot understand anyone who plans to live in a nursing home...send me out to pasture or sea, please. I know there are plenty of folks to don't seem to mind the idea. I'd suggest a visit to a local nursing or memory care unit, and have a few meals there before you pay for an end you may regret.

Well.....I doubt anyone plans to end up in a nursing home just as no one plans to get cancer or become paralyzed, etc. But stuff happens. I used to be in the camp of " I have substantial assets. I can afford to self insure." Then I thought " Why not offset part of the risk by purchasing a LTC policy if the premiums and benefits seem reasonable?" How many of us keep our homeowner's insurance once our mortgage is paid off? Probably nearly everyone. No one plans that their house will burn down....but if it happens....the $1,000 annual premium will seem like a pittance compared to the hundreds of thousands to rebuild.


LTC is the same thing. It is a hedge. I may never need it, but if I do I will be happy to be able to offset part of the cost in the future. And if 20 years from now the premiums seem too much, I can decrease the benefits or simply discontinue the policy. And No.... the premiums were not wasted because I could need LTC in my 60's or early 70's due to illness or an accident so the coverage would stay in effect year to year until I cancelled it just as with any insurance.



Of course, if my wife and I did not desire to leave a legacy, I would not buy LTC insurance. I would simply spend down assets and let MEdicaid kick in.

 

[Hermit]

Most people who need long term care never step foot in a nursing home. For every 4 people receiving care in a nursing home there are 30 people receiving care at home. In other words, for every CAR load of nursing home residents there's a BUS load of home care recipients.

4 out of every 5 long term care insurance claims start at home. 3 out of every 5 long term care insurance claims end at home.

[Banned LTC Salesman],

You have thrown out a lot of numbers and statistics. Could you provide some references so we can understand where the info is coming from?

 

[Banned LTC Salesman]

It seems like the majority of policyholders who purchased more than 10 years ago have seen rate increases. Often hefty ones. That might not be >because< they got older, but it is certainly true that they are older.

It is true that many of the older long-term care insurance policies have had large premium increases. Fortunately, insurance regulators do not allow new long-term care policies to use the old pricing methods.

To prevent rate increases, 41 states have enacted very strict pricing regulations for new policies.

For an insurance company to get approval to sell a new long-term care insurance policy today, the policy must comply with the following pricing regulations:

It must include ALL prior rate increases in the pricing, and
It must include a pricing “cushion” (about 10%) as extra protection from rate increases.

For example, if the older policy sold by the insurance company cost $1,000 per year for X benefits and that policy had an 80% rate increase, a new policy with X benefits must be priced no less than $1,980. Here’s how that’s calculated:

$1,000 (older policy pricing)
plus 80% (older policy rate increase)
plus 10% (cushion)
= $1,980 (new policy pricing)

Additionally, these 41 states have removed the profit incentive from rate increases. On these newer policies, if an insurance company seeks a rate increase they have to reduce the profit they had priced in the policy AND they can't put any profit in the rate increase itself.

Since any new policy purchased today already includes all the prior rate increases, the likelihood of a large rate increase on a new policy purchased today is pretty low.

 

[Independent]

To prevent rate increases, 41 states have enacted very strict pricing regulations for new policies.

For an insurance company to get approval to sell a new long-term care insurance policy today, the policy must comply with the following pricing regulations:

It must include ALL prior rate increases in the pricing, and
It must include a pricing “cushion” (about 10%) as extra protection from rate increases.

For example, if the older policy sold by the insurance company cost $1,000 per year for X benefits and that policy had an 80% rate increase, a new policy with X benefits must be priced no less than $1,980. Here’s how that’s calculated:

$1,000 (older policy pricing)
plus 80% (older policy rate increase)
plus 10% (cushion)
= $1,980 (new policy pricing)

Additionally, these 41 states have removed the profit incentive from rate increases. On these newer policies, if an insurance company seeks a rate increase they have to reduce the profit they had priced in the policy AND they can't put any profit in the rate increase itself.
.

Do you have a link?

 

[meierlde]

And reserves can turn out to be grossly inadequate due to erroneous initial assumptions. I'm a retired FCAS, so not involved in LTC pricing but trust me, the same thing happens in LTC.

Tell Ge about this, this is why they have to at 15billion to the reserves for Genworth. Initial premiums were not high enough.

 

[Banned LTC Salesman]

Tell Ge about this, this is why they have to at 15billion to the reserves for Genworth. Initial premiums were not high enough.

Long-term care insurance is great for policyholders, not-so-great for stockholders.

 

[foxfirev5]

This thread has led me to check LTC insurance off my to do list. There comes a time when you have to just run with what you've got.

 

[Banned LTC Salesman]

This thread has led me to check LTC insurance off my to do list. There comes a time when you have to just run with what you've got.

If you can buy good long-term care insurance for an annual premium that's less than one-half of one percent of your net worth, you're foolish not to own it.

 

[RobbieB]

I've had an impossible time with Genworth trying to claim for my Dad when he was sick. Send us this, send us that, prove that he is off Medicare 100 days. You didn't send us what we asked for we're cancelling the claim. I have a folder a half inch thick. They won, they wore me down.

I will never buy anything from Genworth.

 

[aja8888]

I'm surprised Nords hasn't chimed in yet. He has a real story about getting an insurance company to pay up on LTC coverage.

 

[Banned LTC Salesman]

I've had an impossible time with Genworth trying to claim for my Dad when he was sick. Send us this, send us that, prove that he is off Medicare 100 days. You didn't send us what we asked for we're cancelling the claim. I have a folder a half inch thick. They won, they wore me down.

I will never buy anything from Genworth.

Filing a long-term care insurance claim can be very difficult. That's why when my MIL needed to file a claim for her LTCi policy, I didn't do it. We contacted one of the national home care agencies and they handled it for us. This particular home care agency processes thousands of long-term care insurance claims every year. All we had to do was sign a couple of HIPAA forms and they took care of the rest. Her claim was approved in about three weeks.

They handled the claim for free. It makes sense. The home care agencies get paid by the long-term care insurance companies. They have a financial incentive to set up a system to speedily process long-term care insurance claims.

 

[REWahoo]

I've had an impossible time with Genworth trying to claim for my Dad when he was sick. Send us this, send us that, prove that he is off Medicare 100 days. You didn't send us what we asked for we're cancelling the claim. I have a folder a half inch thick. They won, they wore me down.

I'm surprised Nords hasn't chimed in yet. He has a real story about getting an insurance company to pay up on LTC coverage.

^ This is why I've made it clear to my wife and kids they need to have a third party (home care agency or medical claims management professional) handle the LTCi claims process. Having the insurance should leave sufficient funds to pay for any third party service charges, which may be zero in the case of some of the national home care agencies.