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The need for Long Term Care insurance has never been stronger, and Genworth is committed to solving for this need. Given the continued low interest rate environment and industry dynamics, we are leveraging our extensive experience to best position our organization and the industry for greater stability and future growth.
Our strategy is built on a history of conservative underwriting principals, a deep understanding of market trends, and a disciplined approach to overall pricing. While we pride ourselves on strong sales, at the same time, we continually manage sales volumes to actively manage capital and risk.
Therefore, we are taking the following interim actions and plans to introduce new products in 2013 to help moderate business flow, continue to manage morbidity risks and support the long term growth and health of our business:
- Adjustments to Privileged Choice® Flex features and benefits, effective July 30, 2012
- Adjustments to Long Term Care Insurance Underwriting, effective July 30, 2012
- Adjustments to Agent Commission Model, effective July 30, 2012
- Introduction of new Total Living Coverage® product, effective September 4, 2012
These adjustments apply to new business, and do not impact in-force business.
Looking ahead, we believe that the evolution of our Long Term Care insurance business requires us to continue to actively invest in research and development to modernize the solutions available to consumers. We will consider features and benefits as well as employ new ways to think about pricing and underwriting. All efforts focus on 3 primary goals:
- Create products that solve for consumers’ Long Term Care needs
- Deliver a profitable, high ROE product that delivers value to our shareholders
- Ensure continued strength and stability for Genworth
We recognize that these actions might result in additional competition in the marketplace. Ultimately, though, greater competition is likely to foster a more vibrant, competitive landscape necessary to meet the growing needs of an aging population and rising health-care costs.
ADJUSTMENTS TO PRIVILEGED CHOICE FLEX FEATURES, BENEFITS AND DISCOUNTS
EFFECTIVE JULY 30, 2012
Feature and Benefit Changes
Lifetime Suspend sale of Lifetime (Unlimited) Benefit Multiplier option
Limited Pay Suspend sale of Limited Pay options (10 Pay and Pay-to-65)
Discount Changes
Preferred Health Eliminate Preferred Health Discount
Couples Discounts Reduce Couples discount, pending state approvals
Two apply, two issued: from 40% to 20%
Two apply, one issued: from 25% to 10%
ADJUSTMENTS TO LONG TERM CARE INSURANCE PRODUCTS’ UNDERWRITING AND APPLICATION PROCESS
EFFECTIVE JULY 30, 2012
The following underwriting changes are applicable to all Long Term Care Insurance products.
| Application Changes | |
| Family History | Require completion of the Family History Profile during the application process |
| Underwriting Changes | |
| Schizophrenia | Any history of Schizophrenia renders the applicant uninsurable |
| Social Security Disability Insurance (SSDI) | Applicants receiving benefits currently or within the past 5 years are uninsurable |
| Cardiovascular Disease & Tobacco Use | History of the following conditions, in combination with tobacco use within the past 12 months, will be uninsurable: |
| Amaurosis FugaxAortic Aneurysm
Carotid Artery Disease Coronary Artery Disease Peripheral Arterial/Vascular Disease (PAD/PVD) Retinal Artery Occlusion Transient Ischemic Attack (TIA) |
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| ADJUSTMENTS TO AGENT COMMISSION MODEL, EFFECTIVE JULY 30, 2012 |
| Genworth will implement a 15 point reduction of first year gross commission in all states, except as noted below.Delaware and Wisconsin, including Delaware and Kentucky Replacements, will reduce by 10 points.
For Michigan applicants age 65 and older, commissions will be reduced by 5 points in each of the first three years, for a total of 15 points. |
INTRODUCTION OF UPDATED TOTAL LIVING COVERAGE 2012, EFFECTIVE SEPTEMBER 4, 2012
Genworth will modify the features and benefits of the Linked Benefits product, bringing more value to clients’ long term care plans. Additional information will be available late summer.
Later today, we will share detailed messages to our distribution partners, outlining each of the above changes.
For your review, attached here are those messages:
Privileged Choice Flex Product Adjustment Bulletin
Underwriting Adjustment Bulletin
Agent Commission Adjustment Bulletin
If you have any questions, please reach out to your Genworth Sales representative.
Thank you for your continued support,
Pat Foley
President, Distribution & Marketing