Insurance Companies: What They Will Keep and What They Will Abandon

INSURANCE COMPANY WILL KEEP THESE POLICIES

ACE INA (previously Signa) is a company that many have never heard of. They have policies such as the following that they will never pull. These are policies to cover expenses while a patient is in the hospital. These polices were issued decades ago when patients were in our hospitals for extended periods.  Today  patients are in the hospitals for very short periods. Over many decades of payments patients will have paid in thousands of dollars thinking that if they are in the hospital they will have some money provided to them for their stay. None of it is worthwhile. Unless a patient is in the hospital for a very long period of time there will be very little money provided. And what is provided requires 4-5 forms to be filled out that take time for the patient to complete and then the hospital and the medical authorities charge for their part in filling out the forms. So thousands of dollars can be put into these kinds of plans with the thought that there will be some financial comfort if there is a hospital stay. But companies like ACE INA will continue to milk this   cash cow because conditions have changed in our hospitals.  An insurance company like this could have increased the benefits, decreased the premiums, added home stay to their contracts and notified clients of a cancellation of these contracts, provide the reasons and mention suitable coverage that they will provide.

                                             ACE INA did none of these and their senior executives are not answering any calls.on this issue

THIS INSURANCE COMPANY WILL NOT CONTINUE TO ISSUE THESE POLICIES

RBC  Insurance  just announced that they will no longer issue insurance policies for Long Term Care,  Critical Illness, Term to 100 Insurance Policies and Universal Life Insurance   Policies.  The reasons behind this  decision  are  the continuing low-interest rates,  volatile and low equity returns for their investments,  increased regulatory requirements and though they are not saying it they will have looked at previous policy  provisions and determined that their policyholders are living much longer than they thought they would and the pressure on their payouts will be immense.  These decisions were made to the public prior to the Moody downgrade that was announced.  They would have known this was coming and thus they pulled these policy offerings.

Both companies are acting in their own interests.

RBC INSURANCE PULLING ITS LIFE INSURANCE PRODUCTS FROM THE MARKET PLACE – IMPLICATIONS

In a surprising announcement RBC Insurance has just announced that they are pulling out of the following insurance markets

• Term to 100 Life Insurance
• Critical Illness
• Universal Life Insurance
• Long Term Care

RBC is a major player in the life insurance industry.  Likely other companies will follow their lead

The major reasons that RBC is pulling these products from the market is

• Interest rate continue to be low
• Equity returns are volatile and the returns are low
• Increased regulations  are costing them money and time
• An aging population are not cancelling their polices
• A fifth  not mentioned but I think is also a consideration is that they have looked at their book of business and drawn the conclusion that they will be paying out more on these policies than they originally thought would be the case
• They have concluded that their book of business on these policies is or will not be profitable

THIS WILL HAVE SERIOUS IMPLICATIONS FOR CLIENTS AND ADVISORS.   IT WILL BE  MORE THAN INTERESTING TO SEE HOW THIS ALL UNFOLDS