Tuesday, September 25, 2007
Some financial advisors who sold long-term care insurance to clients may have some explaining to do. For the first time, Genworth Financial Inc. (GNW), the largest provider of individual long-term care insurance, or LTCI, has said it will raise premiums for existing customers. Genworth, which said previously that it projected premiums would remain static for life, filed in all 50 states last month for premium increases of 8% to 12% on most of its policies. For advisors who sold the policies and didn't warn clients of future premium increases, the news "can certainly put an advisor in an uncomfortable situation, " says Jason Abosch, an associate at FranklinMorris. Advisors like Abosch say advisors who sell LTCI products should be warning clients that the policies' pricing is unpredictable and more than likely to rise again, regardless of what insurers routinely say. Advisors who don't provide such warnings can risk losing clients' trust when insurers like Genworth do in fact raise premiums. Genworth's move raises fears of a return to the darker days of the past 15 years, when many insurers raised premiums rapidly; some went further, selling off policies and exiting the business altogether.