LTC Tree just heard through sources that Genworth will cease writing California Long Term Care Insurance business 3/21/2013. This action is due to the fact that Genworth still has their old California Long Term Care Insurance product active in the state. The product that will be taken away in California Long Term Care Insurance market, is the Genworth LTC Choice and California Long Term Care Insurance Partnership version. Those plans still have the old rates from at least four years ago, with no potential in sight for approval on the new products and pricing.
Obviously, when a company cannot control it’s own pricing, it presents a real sustainability issue on new business, because each new case that is written is based on old pricing data. They are taking the same steps John Hancock took a couple years ago when they temporarily pulled out of the state. John Hancock since has come back to the state and we anticipate in the next 24 months Genworth will too once their new California Long Term Care Insurance product is approved.
California Long Term Care Insurance Removal of Genworth will Hurt Consumers
Unlike Federal and State governments, companies cannot run up huge losses and bail themselves out by printing money. The action of California not allowing Genworth to increase prices for new customers, is a disservice to its residents in my opinion. Now, the folks in California will have less companies to choose from when buying Long Term Care Insurance. As Economics 101 teaches, less competition in a market leads to worse outcomes for the consumer.
To put how old the Genworth Pricing in California is compared to most other states in perspective, I ran a few numbers to show how low and unsustainable their pricing is.
A couple both 55 years old could buy a plan in California for $2994/yr (combined). Those same benefits bought in most other states would cost $5042/yr. If you work out the math, California Long Term Care Insurance with Genworth’s California Long Term Care Insurance plan is 68% behind what market forces and actuarial data are showing the company they should be charging. We see why they must pull out of the California Long Term Care Insurance market.
Furthermore, these artificially low prices are not sustainable and will eventually be increased on the customer down the road through state approved rate increases. It is better for a person to know what amount to plkan for today rathter than get a notice like CALPERS folks did of a near 100% rate increase on folks who bought it a decade or so earlier.
Bottom line, if your are in the market for California Long Term Care Insurance currently, you will want to act fast if you prefer Genworth. LTC Tree’s virtual process will allow you to beat the looming 3/21/2013 deadline of this important change so fill in the form below and we’ll rush you the quotes. We will update this blog as we hear of the firm deadline.
To read more on California Long Term Care Insurance products and the prices people are currently being quoted in real time click on our California state page found here.