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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 19256  
Subject: LTC - Insurers Gaming the System Date: 2/11/2000 9:59 PM
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Interesting article in the Jan/Feb 2000 issue of "Contingencies" the magazine of the American Academy of Actuaries. This quote from page 36 in the article entitled "Health Insurance Public Policy Issues for Y2K and Beyond", by Dwight K. Bartlett III. (Mr. Bartlett is Senior Health Fellow for the American Academy of Actuaries and the former Insurance Commissioner for the State of Maryland.)

<snip>

"The bad news, perhaps, is the growing suspicion by the public and state regulators that some LTC insurers are attempting to gain market share by gaming the system. Individual LTC policies are normally issued guaranteed renewable. In other words, the premiums are designed to be level for the life of the policy, but the insurer retains the right to change premiums on a classwide basis if experience justifies such a change. Some insurers and their actuaries allegedly low-ball the initial premium, knowing they'll prove to be inadequate in the long run.

Among the more Draconian solutions proposed for addressing this abuse is to require that LTC policies be issued noncancelable, so the insurer cannot change renewal premiums for any reason. Given the still-emerging experience data actuaries need to be comfortable about pricing LTC products, non-LTC [noncancelable] products would undoubably have to be priced very conservatively to protect the insurer, discouraging the development of this market.

Perhaps a more workable approach is for the actuarial professional bodies and state regulators to use their disciplinary power more aggressively. making sure LTC insurers and their actuaries don't initially underprice their LTC products intentionally. That would require a philosophical shift for regulators who usually look for overpricing, not underpricing."

<snip>

To explain what's going on here, if your insurer gives you a bargain rate on the premium, you might see a 50% of 100% premium increase down the road if the insurer has too many claims. A large premium increase would undoubtably cause many policyholders to let their coverage lapse because they couldn't afford the larger premium. This represents a windfall for unscrupulous insurers since they're collecting premiums on a LTC product that they have a good reason to believe many policyholders will let lapse before they need to make a claim.

And you thought the annuity salesmen were bad. <grin>

intercst
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Author: jasmada One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2147 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/12/2000 1:59 AM
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Wow it is good to know these facts so when I sit down with clients that I give them a written 10 year fixed premium guarantee, yep they exist but were not mentioned in that study I wonder why ?, and you thought all insurance companies were bad. Or better yet, give people a reason not to protect themselves. Its bad enough that they think they will never use it or that they can afford to self-insure. When initially sitting down with some clients with assets in tax sheltered accounts in the amount of 3 or 400k they think they can afford to take care of the risk, then I ask them if they would like to be protected by a company with only $400,000.00 in assets and they say "no way, you are crazy" not realizing that if they self-insure that is what they have done. Well if you are not retired yet consider taking on a second job just so you can keep up with the heavy taxation that will take place to keep the aging population, that continues to grow, alive and sheets changed, clothes cleaned etc, for those that will be on public assistance.... Thank GOD for inurance at any level and not to mention the fact that auto insurance has been raising premiums and discriminating against the "older" generation for years, I do not hear an outcry here and they drive less than many people. Of course this may be an advertisement for Dr. Jack, yes Mrs. Jones your arthritus is not getting any better, just take a deep breath and relax it will all be over shortly.

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Author: dgthepiper Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2148 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/12/2000 8:21 AM
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when I sit down with clients that I give them a written 10 year fixed premium guarantee, yep they exist but were not mentioned in that study I wonder why ?

Thanks for pointing out the (short) 10 year guarantee premium period on the policy! This is the type of policy that most people will hold for a much longer period of time.

IMHO, a 10 year guarantee on premium is no good at all. That's how an insurance company can easily pull this scam on people in their 40's and 50's. The chances that those people will actually have a claim in the 10 year period is low, then the insurance company prices them out.

I'm not against long term care insurance, but I am against the insurance companies taking in money for it and then screwing us later, as they do so well!



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Author: rjm1 Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2149 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/12/2000 8:42 AM
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Well if you are not retired yet consider taking on a second
job just so you can keep up with the heavy taxation that will take place to keep the aging population, that continues to
grow, alive and sheets changed, clothes cleaned etc, for those that will be on public assistance.... Thank GOD for
inurance at any level


If I buy LTC insurance will it reduce my taxes since the goverment will not have to pay for me? What percent decrease in taxes should I expect of say the next 10 years. Or should I buy the insurance and then still get that second job?

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Author: intercst Big funky green star, 20000 posts Top Favorite Fools Top Recommended Fools Feste Award Nominee! Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2151 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/12/2000 10:54 AM
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jasmada wrote,

Wow it is good to know these facts so when I sit down with clients that I give them a written 10 year fixed premium guarantee, yep they exist but were not mentioned in that study I wonder why ?

A 10 year fixed premium guarantee is fine, but what happens to the premium in year 11?, year 20?

Like any insurance product, you can't rely on what the salesman tells you. Do your own research. Put together your own spreadsheet to evealuate the costs and benefits of the policy. In two words, BE CAREFUL.

Jasmada, I apologize if you've lost any commissions as a result of my posting this important info to the Board. <grin>

intercst

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Author: Chipsboss Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2152 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/12/2000 1:45 PM
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When initially sitting down with some clients with assets in tax sheltered accounts in the amount of 3 or 400k they think they can afford to take care of the risk, then I ask them if they would like to be protected by a company with only $400,000.00 in assets and they say "no way, you are crazy" not realizing that if they self-insure that is what they have done.

I see that question as phrased unfairly. The legitimate question would be something like this: "Would you like to be protected by a company that has $400,000 in assets backing up EACH of its customers, so that, for 1000 customers, it has $400,000,000 in assets?" Your more savvy clients will surely notice the discrepancy.

Chips, confidently self-insured

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Author: jasmada One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2155 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/13/2000 1:52 AM
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Please tell me about the last time you were screwed by an insurance company. So people can learn from your experience. Or for that matter tell me about someone you knew who was screwed by a long-term care policy.

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Author: jasmada One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2156 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/13/2000 1:55 AM
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Well if everyone is going on welfare why don't we all do it. I mean really the only thing left at that point in time in your life is your dignity anyway. I would have preferred to see my Grandmother in her last days in her home where she loved to be instead of the God Forsaken medical/medicaid facility. there are tax qualified policies out there and a full Non Forfeiture benefit will reduce estate taxes if you are one of those who thinks they can pay for this care out of pocket. A ten year rate guarantee and a 10 pay are different. A 10 pay plan is paid off, no more premiums.

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Author: jasmada One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2157 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/13/2000 1:58 AM
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Lost commissions I know you know better than that. Deliver three hundred policies per year and lose one, two, five or even seven.... ? Hmmm does not set me back in the least bit. I have yet to walk into a room where a client is on claim and have them throw me out. The sad part is getting thrown out when Im doing a reality check and leaving when they have no coverage.

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Author: jasmada One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2158 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/13/2000 2:06 AM
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What I see as unfair is people taking their wives and children to the cleaners because they were to stubborn to listen or even think. If you remember those expert pilots two weeks ago were confident that they had everything under control, experienced, plenty of money yada yada yada, sound familiar. Well look what they did to 85 people, yep they had it all under control. Do you see yourself as any different, of course you do....you see you are right you don't need no stinking insurance. I could have chosen a number of fields to go into that paid so much more, like the skimming that takes place against union members when setting up pention plans, selling annuities to those who think they can self insure and claim medicaid benefits when they can't, hide assets etc...much better pay there. Or how about homeowners insurance which Im sure you carry, so rare that anything would happen but you still pay those premiums and that agent makes money like crazy...its a good living believe me, how about auto insurance you could easily afford to take care of a $500,000 lawsuit when your home and assets are at stake , could'nt you..... Do you see my point I do this because it works and I believe in it and as long as I feel that way, which will always be, people will get insured by me. Your neighbors, your distant relatives, your friends etc.... Remember one thing, it may be that your purpose in life is to only set and example for others, stay self-insured it will only help those of us who do our job well. Thanks

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Author: NYMOM One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2169 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/13/2000 1:24 PM
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There must be a level of assets where people can self insure themselves. What level do you consider this to be?

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Author: jasmada One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2173 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/13/2000 1:40 PM
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3 million

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Author: tondeleo Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2245 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/15/2000 7:20 PM
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I'm sorry Jasmada. I've been reading the posts and thought you were unfairly ripped, but $3M is wayyy too much. If I have $1M, and am self insured, at $50K/year it would take me 20 years to draw it to zero. And that assumes I had it in a mayonnaise jar under the porch.

No matter what happens, I won't spend 21 years in a nursing home (I'll leave at 20), and what investments I have won't be in a jar.

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Author: jasmada One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2246 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/15/2000 7:27 PM
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Wow ! Well lets see I appreciate your thoughts on being unfairly ripped, but do tell me what it means to be self-insured. How would you do it ? What is your plan, how do you fund your insurance account ? I was just on the phone with a potential client who told me he could be self-insured and thats ok, see you could put $1800 per year in an investment account instead of having car insurance right ? I mean each year put $1800 away until you had an accident and then pay for it, save money on the premiums. This is what you are telling me, you do not wish to pay premiums you would rather spend your own money. Why did I say 3 million with interest sitting in a ready acccessible account, so there are no penalties or taxes on withdrawl ? (does that make sense to you) Would that not work or would it ? Once I hear back from you then I will begin a philosophy of common sense thinking on being self-insured.

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Author: DHatch Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2262 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/16/2000 11:24 AM
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jasmada Date: 2/13/00 1:52 AM Number: 2155
-------------------------------------------------

<<Please tell me about the last time you were screwed by an insurance company. So people can learn from your experience.>>

Ok. Since you asked, the most blatent example was when I had paid premiums for over 25 years into a state-organization-sponsored insurance company without making any claims or collecting any benefits until I started having heart attacks at which time I was informed that the insurance company was dropping the coverage for the entire class rather than pay out claims.

It was not much help that the insurance company offered coverage comparable in benefits to the benefits available over 25 years ago which apparently provided for up to $100 a day if you were hospitalized, but at today's premiums of over $600 each month.

Nor was it particularly helpful that the state organization withdrew its sponsorship of that particular insurance company.

It has been my unhappy experience that insurance companies seem better at accepting premiums than at meeting their implied obligations by actually paying out anything in benefits which they might otherwise somehow legally wiggle out of actually paying.

Some insurance companies now also seem to make it almost insurmountably difficult to ever actually get a legitimate claim paid, particularly in their most recent ploys of demanding almost realistically impossible standards of "proof" in more and more relatively routine claims.

The only benefit too many will ever receive from their premiums is in whatever comfort they might derive from believing in the illusion that they might actually have and be able to keep any coverage whatsoever.

Of course, others may have had happier experiences.

After all, there are always exceptions which prove the rule.

DHatch

P.S. In general, insurance companies are in business to make money, and, the more claims they can deny or payments they can delay, the more money they can make.



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Author: jasmada One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 2267 of 19256
Subject: Re: LTC - Insurers Gaming the System Date: 2/16/2000 2:22 PM
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I have asked for stories time and time again and have never received a response except for yours and I think you. With your permission I would like to share this with clients I have here in California who are considering the Cal-Pers Long Term Care Program in which the State Insurance Comissioner has not approved them to do business. State organizations usually get into the insurance game having no idea on how the business works, so you must be careful. Remember most states cannot maintain a budget anyway so how could they ever maintain a business. If the federal government were a business it woul be bankrupt thank goodness for those of us who continue to buy from them, or correction, not buy but are forced to pay them off.

Thank you

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