Barry J. Fisher Paradigm Insurance Marketing

I have been getting many calls from agents about the CNA Class Action ?Legal Notice?.  Before I get to that, however, I want to bring you up to speed on a another matter of some importance.

As is required by various state laws, companies that introduce new long-term care products must offer those policies to existing insureds.  This has become a routine occurrence over the past few years and in most cases is a non-event since the new premiums associated with the upgrade do not justify a change. With that being said Prudential is now in the process of offering most individual LTCi contract holders a chance to upgrade to LTC3. We have been provided with a chart that describes the upgrades in some detail. If you would like one, please contact your BJFIM/Paradigm marketing representative or email me directly atbarry@paradigmins.com.

Now, back to the CNA issue —

For those of you who have spoken to me about this matter you have learned that I really don?t like class action law suits. I receive so many of these notices in the mail that I have developed a visceral reaction to them.  In the past I would complete the paperwork for my ?settlement?, only to discover that I would receive a check for 21 cents in the mail a year later.  It wasn?t even worth the bother! Someone was making out on these deals and it wasn?t me!

That being said I have reviewed the ?Legal Notice? that has been sent out, I have gone to the website that is provided, www.LTCclassaction.com, and I have had a brief conversation with CNA policyholder services (800-775-1541).  Please keep in mind, I?m not an attorney nor is it possible for me to know an insureds specific situation.  With this here?s what I can tell you that may be helpful:

• The letters that your policyholder receives may vary by policy form involved.  I have seen two versions.
• Option A, Enhanced Contingent Nonforfeiture Benefit, is the default choice.  It appears to be fairly benign and should not dramatically impact the policyholder beyond their current situation.  It merely provides them with a contractual ?out? if they don?t like future premium increases.
• Option B, Tax-Qualified Policy Replacement, may or may not be applicable as the policyholder may already have a TQ product.  That being said, for those who have NTQ LTCi this may be a great opportunity for several reason. According to someone I spoke to at CNA this morning, the new policy?s premium is based on the insured?s original age (as opposed to attained age)  I have asked for confirmation in writing.  This means that the policyholder?s premiums going forward may be lower and the benefit provisions may be better than what they currently have.
  • If you advise your client to make this choice you will need to work with them when they get their new TQ quote and help them analyze the pro?s and cons of taking this exchange option.  When they get this information from CNA, they will have a limited time frame to make a decision.  We can help you on this on a case by case basis.
• Options C, Reduced Paid-Up Benefit, is self-explanatory and in my opinion, should be avoided.

In the event that your clients chose Option B, you may need to brush-up on some of the issues pertaining to tax-qualified and non-tax qualified policies and their differences so that you can discuss them intelligently.  I have done some writing in the past on this topic and I will try to find it and update it if necessary. If you?ve taken my 8-hour LTC-2004 certification course in the last few years there is a section for your review. Concerns that the TQ policy forms would act as a bar to claims payment have not materialized.  Additionally, there are consumer protections and other enhancement that may be offered in the CNA TQ exchange policy that present a better value for your clients.

Please remember that all of us at BJFIM/Paradigm stand ready to assist you in helping your clients sort through this decision making process.  Again, please email me directly if you have any questions; barry@paradigmins.com.

DON?T FORGET TO REGISTER TODAY FOR OUR LONG-TERM CARE INSURANCE SUMMITON APRIL 29, 2008. SPACE IS LIMITED AND RESERVATIONS ARE COMING IN DAILY. THIS IS AN EVENT YOU WON?T WANT TO MISS.  GO TO THE BJFIM/PARADIGM WEBSITEFOR ALL OF THE PROGRAM DETAILS & SECURE ONLINE REGISTRATION.