Oct 2, 2014 • Tom Riekse Jr
For advisors who have written LTC Insurance, dealing with client rate increases are a part of the business.
Rate Increases on in-force policies, as has been well documented, are due to extended low interest rate environment and the fact lapse rates are lower than expected. Here are some ideas on dealing with rate increases, along with a quick video from Financial Planning about a playbook to make it happen.
1. Right Move - listen with empathy. Although there may be a very legitimate reasons for the rate increase the first step should always be empathy and letting the policyholders vent their frustration.
2. Wrong Move - Buy into a conspiracy theory that insurers purposely under priced plans so that they could raise rates on policyholders later. In fact, some older plans were subject to inappropriate minimum loss ratio requirements that forced actuaries to lower premiums! Sure, mistakes were made in pricing - but not intentionally. Premiums were designed to remain level, they just didn't end up that way.
3. Right Move - Compare current plan premium and benefits availalble. When clients do an in-force policy review and see what is available now compared to what they bought (even with the rate increases) they know they made a good decision.
4. Wrong Move - Dropping inflation coverage without considering the implications. Some plans will reduce the inflated benefit amount back to the origional issue amount when inflation coverage is dropped - not a good idea! Instead, consider reducing the daily or monthly benefit which may have more than kept up with inflation.
5. Right Move - get help from experts. If you partner with an LTC expert such as LTCI Partners, they can assist with the options and working with the carrier.
Take a look at this video from Financial Planner Magazine...
What do you think? Any other tips on dealing with in-force premium increases?
Written by Tom Riekse Jr
Tom Riekse, ChFC, CLU, CEBS is the Managing Director of LTCI Partners, one of the largest national distributors focused on long term-care planning. LTCI Partners works with financial advisors, benefit brokers, associations and anyone else interested in helping protect people against the devastating financial impact of a long-term care event.
