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Independent Insurance Agent


Sullivan Insurance
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LONG-TERM CARE INSURANCE RATES EXPECTED TO RISE IN 2010
Increase attributed to low interest rates, longer life expectancies and lower-than-anticipated policy lapse rates.

This week, Employee Benefits News reported that insurance agents can expect a significant increase in long-term care insurance (LTCi) premiums this year. The publication cites a report by Jeff Lane, an analyst for A.M. Best Co., indicating that a combination of ultra-low interest rates longer life expectancies for LTCi and a low lapse rate among policyholders is causing many carriers to seek higher premiums.
 
Independent agents may wonder how to explain the rate increase to a customer. (It should be noted that rate increases are not expected to apply to customers who were 70 or older when they purchased their policy). On one hand, carriers have long maintained that LTCi is essential for Americans to protect their assets, maintain their standard of living and their ability to procure care from a quality LTCi provider. On the other hand, imagine telling a client that carriers' assumptions surrounding pricing included higher lapse rates than expected. Of course, all insurance companies need to use realistic assumptions when pricing and reserving their insurance products. However, many insurance agents have done a good job of educating their clients to the need for LTCi and have sold them policies that reinforce the value of having good coverage. With this in mind, one has to wonder why typically conservative insurers would be aggressive when it comes to the lapse rate assumption for LTCi policies. Having purchased a policy, why would an insured drop LTCi coverage as he or she gets older? It is counterintuitive to most agents and policyholders.
 
If LTCi carriers do significantly raise rates this year, the increase will serve to ignitethe political health care debate. Independent insurance agents may get caught in the middle with many of their clients who experience significant rate increases in 2010. While this sustained period of low interest rates would have been difficult to predict, the policy lapse factor may be a very difficult pill for agents and their customers to swallow. It will be interesting to see where LTCi rates will end up in 2010.

Dave Evans (dave.evans@iiaba.net) is a certified financial planner and IA l-h contributing editor.



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Testimonials
I saved over $300 over my old agent! Try this agency today for second opinion! I was amazed at the difference in cost, even though they more than doubled my protection! I found agency online while searching for a more local agent since I moved and I was impressed by their site. The agent (Kevin) quoted me initially via e-mail (as I didn't want to speak to another insurance person). He answered all my questions via e-mail, so I called the agency to go over my coverage. What a great experience - he went over everything in the detail and told me by putting my auto & home with the same company I could save additional money. He walked me through a 20 point checklist that helped identify coverage and discounts I was missing, and even advised me on some non-insurance ways to help protect myself and our house. I saved over $300 & was even able to add umbrella to add over $1000000 to my protection, all for less than I was paying before. My experience with this agency has proven to me that not all agents are created equal. Kevin and his staff also gave us a free review ... I was amazed at the difference in cost, even though they more than doubled my protection! I found agency online while searching for a more local agent since I moved and I was impressed by their site. The agent (Kevin) quoted me initially via e-mail (as I didn't want to speak to another insurance person). He answered all my questions via e-mail, so I called the agency to go over my coverage. What a great experience - he went over everything in the detail and told me by putting my auto & home with the same company I could save additional money. He walked me through a 20 point checklist that helped identify coverage and discounts I was missing, and even advised me on some non-insurance ways to help protect myself and our house. I saved over $300 & was even able to add umbrella to add over $1000000 to my protection, all for less than I was paying before. My experience with this agency has proven to me that not all agents are created equal. Kevin and his staff also gave us a free review on our life insurance since it has been a while since we had review and recommended we have a financial review as well. He didn't "sell" us anything, instead he just pointed out what we may want to consider - no pressure and no hassles. I highly highly recomend sullivan insurance & financial and I have already set up my next appointment to go over my life insurance and go over my 401K with their financial planner. I am going to have Kevin write my whole family.
Kathryn
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