Category: 2016

John Hancock Life Insurance Company announced today they are ending sales of long-term care (LTC) individual policies. This is not surprising news. I stopped recommending stand alone LTC plans years ago. The fundamental flaw of individual LTC policies from the consumer’s point of view is that they are subject to future rate increases. Carriers sold benefit rich LTC plans with inflation protection, in their heyday top end plans offered unlimited an benefit period with annual 5% compound benefit increases, but in recent years policy owners have been hit with double digit rate increases and the potential of more in the future. Individuals in their retirement years can ill afford those premium increases. Besides traditional LTC plans are use it or lose it.

The movement is to hybrid life insurance LTC plans.  Please refer to my comprehensive guide: Life Insurance that pays for Long Term Care: the hybrids. Long-term care or chronic illness benefits are included with life insurance, a living benefit as well as a death benefit. There are some finer print provisions to watch out for, LTC insurance vs. chronic illness benefit, permanent vs. temporary conditions, but in all it’s high quality coverage. The policy owner receives a benefit one way or another, either accelerating out for LTC or as a death benefit, at a reasonably fixed cost.

Social Security Numbers for Life Insurance: Locating Beneficiaries Trumps Privacy Concerns

In a perfect world when the insured of a life insurance policy dies, the beneficiary soon after notifies the company and files a death claim. But what if the beneficiaries are not aware of the policy’s existence or have died themselves? Death creates a void, combined with poor planning, no executor, no immediate relatives, a lack of information. Decades may have passed since the life policy was taken out. Beneficiaries forget details, change addresses and phone numbers.

Evidently life insurance companies, at least up until a few years ago, tended not to fill the void.  A good number of carriers have reached settlements in multiple states, including California, for failure to identify and pay claims for policy holders. They were exposed as having a double standard, using the social security master death file to cease payments on annuity customers who had died. That’s legitimate and in their best financial interest to stop annuity payments, but on the other side of their operations did not use the social security master file to identify deceased life insurance policy owners because it would cost them money to pay out the death benefits. Worse it allowed carriers to drain cash value out of permanent life policies and allow them to lapse when required premiums were no longer being paid.

Social Security numbers for beneficiaries depend on the state, the carrier and product. Most major life carriers, though not all, request the social security number for their term, Universal Life, IUL and participating whole life products. In the past applicants could request the social security number be waived for the beneficiary if not provided on an application, but given the more strict compliance post settlement environment, many carriers not will not allow that.

Simplified issue whole life companies, better known as burial insurance, still tends to require only the most basic information on beneficiaries. I’m surprised life companies, given the predictable results of lost policies or beneficiaries, still get away with that.  For one carrier, unlike the other states, for their New York final expense application, besides name, date of birth and relation to the insurance asks for the beneficiaries address, social security number and phone number. New York sets the gold standard for consumer protection. Even though those standards are restrictively high in many aspects, it’s certainly justifiable here to help facilitate claims.  Florida has recently tightened their laws.

Even if not required, provide social security numbers for all beneficiaries. Plan for the unexpected decades from now. It’s a valuable resource to help locate a beneficiary. Give as much basic information as possible, and as time passes keep the contact information up to date.

Life insurance carriers require applicants to provide social security numbers for the insured and owner of the policy. Don’t expect to get around this requirement primarily to prevent fraud and misrepresentation. Carriers do MIB, or Medical Information Board, check, and may do pharmacy prescription checks.

Licensed Agent:  Sean Drummey
national producer #5534308
phone: (910) 328-0447
email:   spdrummey@gmail.com

Being HIV-positive used to be an automatic decline for life insurance except for guaranteed acceptance products. HIV-positive people now may be able to qualify for life insurance through Prudential and John Hancock.  Prudential offers 10 and 15 year term.

John Hancock’s recent announcement has more to offer.  People ages 30 to 65 may qualify for up to $2,000,000 in coverage for all products, if the applicant is able to show “a favorable and stable clinical course.”

I would surmise favorable applicants will demonstrate, besides good lab numbers, diligent compliance with their treatment regimen.

The news last week that Genworth Financial Inc. suspending life and annuity sales was a regrettable milestone in the company’s history.  Genworth and First Colony Life Insurance Company before it had a commendable record for high quality life insurance products: the $25,000 no lapse guaranteed UL and the Colony Term UL come to mind.  Reading recent Fitch’s ratings downgrade outlines the difficult predicament the company is in.  Losses in their LTC insurance business have had a significant impact.

Long Term Care, LTC, insurance has proven hard to price correctly. Part of the problem was due opened ended benefit rich plans being sold with 3% or 5% compound inflation protection. The real problem from a consumer’s point of view is that traditional LTC insurance policies are subject to rate increases and some over the last decade have been significant.  It’s hard to justify risking the policy will someday by priced out of a retirement budget.

One viable avenue for coverage still exists: hybrid life insurance plans with either an LTC rider or a Chronic Illness Rider.  The consumer can lock into a lifetime fixed premium.  Granted the benefit is fixed or limited by the plan’s face amount, but at least the consumer can be certain of the coverage’s scope at a fixed price and be able to derive a benefit from the policy one way or another, either for long term care expenses or a life insurance death benefit.