Long-term Care

Important Updates on the Genworth Acquisition

Our team of expert RIA Consultants is happy to assist you and your clients in reviewing their existing LTC policies with Genworth to ensure all parties involved can make the most informed decision for their particular situation.”

A January 4, 2021 article in the Wall Street Journal provided an update on Genworth Financial Inc. that has many advisors and clients concerned. Back in 2016, Genworth agreed to sell itself to China Oceanwide Holdings for $2.7 billion in cash. Then in 2019, Genworth suspended all long-term care (LTC) insurance sales through brokerage general agencies and insurance agents. And now, it appears that the acquisition by the Chinese conglomerate is not going to happen. Like many, you and your clients may be concerned, questioning what to do with their existing LTC insurance policies.

Like several LTC insurance carriers, Genworth has asked for multiple rate increases on in-force policies. So, what does this recent news mean concerning your existing policy, the ability to pay claims, or future rate increases? We are uncovering what’s possible as more comes to light, but we can provide insight into what we believe you and your clients should be doing.

First, Genworth has roughly $30 billion in reserves, specifically set aside for LTC claims. We also have every reason to believe they’ll continue asking for rate increases on their existing block of business. And while rate increases aren’t something we want to see, they will add to the existing reserves and provide the necessary funds to pay claims, which is something every insured wants.

”While Genworth has substantial assets to provide benefits when it comes time for a claim, the bigger question is,

How easy will it be for your claim to be approved?“

While Genworth has substantial assets to provide benefits when it comes time for a claim, the bigger question is, how easy will it be for your claim to be approved? LTC insurance companies have touted the fact that the insured would have a dedicated team into which they could call. This would provide direct access to a human being who could, over the phone, guide them through the process. With Genworth looking to sell and not wanting to commit further capital to this block of business, one has to wonder – will they continue to have a robust team in place to help insureds navigate through the claims process? One easy way to cut cost is to reduce the amount of overhead and require individuals to file a claim electronically. In turn, making the claims process much more difficult to navigate.

We can’t speculate too much without knowing what’s going to transpire, but we can provide some prudent advice for all advisors and clients who own LTC insurance policies through Genworth. We strongly encourage clients to have their policies reviewed. Historically, we haven’t recommended replacing LTC insurance policies due, in part, to the aggressive pricing on older policies. However, for those who are in their early to mid-’60s, it is worth looking at the market and weighing your options. No one yet knows exactly how many rate increases Genworth will ask for, or how much each rate increase will be. There are simply too many factors that go into making a proper recommendation to transparently do so here. However, our team of expert RIA Consultants is happy to assist you and your clients in reviewing their existing LTC policies to ensure all parties involved can make the most informed decision for their particular situation. Contact us today to learn more.