Insurance News Briefs
- A streamlined agent and broker licensing system is expected to be introduced in the coming weeks in Washington, DC, by The Association of Registered Agents and Brokers (NARAB) . This would create and would allow agents and brokers to more efficiently operate on a multi-state basis. Licensing and carrier appointments would be much easier.
- The metamorphosis of long-term care insurance continues as the industry struggles to be relevant and affordable. Lifetime or unlimited benefit payout periods are fast becoming a thing of the past. One of the last holdouts – State Life, a One America company – just announced that its “Lifetime Extension Rider” on all Asset-care and Annuity-care contracts would cease to be offered, effective March 1st. Genworth dropped their Lifetime payout option at the end of last year. I personally don’t know of any other major carrier that still has a lifetime benefit. Those that already have a lifetime benefit period on their in force policies are likely to get slammed with higher premiums during the next go-round of rate increases – which will probably result in fewer in force lifetime payout benefit periods as policy owners adjust their plans to stay affordable.
- And, speaking of LTCi, lapse rates remain at 1% in spite of continuing in force premium increases. Carriers are providing many more options than were available with the originally issued policies, such as 3% compound benefit increase options, to help people to keep their coverage in force.
- By the way, 12 of the 15 people chosen by federal government for the new Congressional Commission on Long-term Care do not include even one insurance professional. Only the three remaining appointees – to be chosen by the Executive Branch of government – have yet to be named.
- Life insurance companies are easing off of their rate increases on term policies. It appears that carriers have found a comfortable and sustainable cost-of-insurance (COI) for the time being.
- Universal Life plans of insurance, however, are another story. It has yet to be seen what the industry will do about the popular guaranteed no lapse Universal Life plans. Some carriers dropped their guaranteed survivor (2nd-to-die) ULs last year, although some GSULs have reappeared with higher rates, higher minimum face amounts, and/or fewer bells and whistles. Nationwide Life seems to have had the fewest overall premium hikes in its life insurance lineup, but then its prices were higher than most carriers in most cells (rate class/insurance age) anyway. Things should level out this year, but don’t expect as many “lifetime no-lapse guarantees” going forward.
- Indexed Universal Life (IUL) is hot. With the growth rates of most stock indices rising nicely over the last year and a half, policy owners appear to be happy and producers are touting the contract’s “high growth potential” with a “guarantee of principal”. While theoretically true, the actual potential for growth over time is completely unpredictable, even in an up market. Most of that has to do with timing. There are a lot of moving parts in these contracts – almost as many as a variable contract. Buyer beware, and producers – you’d better know what you’re selling and/or increase the maximum on your E & O insurance.
- With the tumble of muni bonds of late, the last bastion of relatively safe tax-deferred investment growth may be fixed annuities. Standard of OR has one with an “affective annual yield of 2.10% for 6 years” guaranteed. If interest rates start to go up, the affective yield of these contracts will follow shortly after. But, right now, a guaranteed 2.10% is better than the 0.15% I’m getting on my “high yield savings account” at Wells Fargo.
