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The Conseco trust: What it means to policyholders and producers

By Frank N. Darras -Shernoff Bidart Darras and Ecehverria, LLP
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A dilemma is brewing in Pennsylvania that is about to develop into a full-blown tragedy for 144,000 unsuspecting Conseco long term care policyholders. Without any notice or warning to these faithful, premium-paying senior citizens, Conseco has proposed creating a new Senior Health Insurance trust to uncouple a hemorrhaging block of business it purchased from American Travelers and Transport Life in the mid-1990s.

It's questionable if producers across the country have been notified of this action by Conseco. Regardless, knowing about this dangerous attempt to sever the losing arm of the company's policies affects all producers selling the long term care product.

It is important to recognize that Conseco originally wanted to be the 800-pound gorilla and own the long term care space, having spent nearly $1.7 billion in acquisitions. Well, they gambled and won the market share they wanted, but faced three major hurdles. Unfortunately for seniors, the policies were oversold, under-priced, poorly underwritten and had too many bells and whistles.

Seniors jumped on the long term care bandwagon, having believed the slick advertising touting independent living in their golden years. Premiums rolled in, seniors held on to their policies and, as they got older, many needed the benefits they so richly paid for. This resulted in claim counts mounting, with Conseco contributing more than $915 million throughout the past 10 years to shore up their long term care business.

Wall Street wasn't pleased: stock prices began to fall and investment income tanked, but Conseco couldn't change the purchased blocks' generous policy language, the economy or interest rates. Since policy lapse rates were at an all-time low, Conseco got tough on claims.

Multi-state conduct investigations ensued, penalties and million-dollar fines were assessed, restitution was ordered and claims, previously denied, were ordered re-opened for new investigation.

Conseco refused to accept responsibility and pointed the finger at increasing life expectancy, increasing cost of care and too many seniors filing claims. Instead of accountability, the company sought repeated rate increases. Many states provided increases, but the company wore out its welcome and the Departments of Insurance around the country began pushing back. State by state, requests for rate increases were denied, reduced or pared down.

Conseco management began "seeking new strategic alternatives." Top management said, "this has become a real burden for management and shareholders."

In August, Conseco announced it was creating a new Senior Health Insurance trust to house 144,000 former American Travelers and Transport Life long term care insureds. No notice, warning or advisement was sent to these policyholders, according to the Pennsylvania Department of Insurance.

But why would the Pennsylvania Department of Insurance allow this, after all the violations it had uncovered, charged and fined Conseco for? This is a matter of record (see www.savemyltc.com).

The trust must be stopped!

The argument to stop this runaway train from uncoupling and letting the long term care policyholder crash has been given by the Pennsylvania Department of Insurance, in their own words, here.

Conseco wanted to be the industry leader in long term care -- now it's time for the company to honor what it sold. Spinning off an eleventh hour trust at Mach speed, without notice to the very policyholders that will be affected, is just wrong.

Senior citizens who purchased long term care insurance deserve the benefit of their bargain. They have paid dearly for these policies, suffered one premium rate increase after another and have hung on to these policies, hoping for the independent living they were promised.

Conseco can't just unhook this train of seniors. It is wrong on every level and the trust should be stopped. When Conseco chose to enter this market, it was a billion-dollar buyer; they shouldn't be allowed to walk away from your grandparents and mine, now.

Making Long Term Care Cool

Every day, we read about the sandwich generation, folks taking care of their parents while raising their own kids. We get cold-calls, emails and are bombarded with advertisements talking about boomers hitting retirement age, says Frank N. Darras, the nation’s leading disability and Long-Term Care insurance lawyer.

Add a dose of Dennis Hopper and his Easy Rider “cool” pitching retirement funds and Aerosmith lending its music to a Cadillac commercial and suddenly, it hits. Are they talking to me? See www.darrasnews.com.

So, what do endorsements by legendary aging icons have to do with your future? Madison Avenue meets Wall Street and they want you. More importantly, they want your dollars.

Here is how it works, says Darras.

Boomers are turning 60, fast
Every year, add 4 million
Make retirement cool, put some heroes from our youth into the mix
Boomers everywhere jump in and buy, believing Long-Term Care is the answer
Carriers charge high premiums, promise an independent life when you are elderly
Big insurance sits back, collects our premiums, marveling at their marketing genius

“Cool can become cold fast when you are old and wrongfully denied your benefits,” says Darras. “Choose your policy carefully. It is a decision that will definitely effect your golden years. Chances are, Mr. Cool won’t be taking your call when you need your LTC the most.”

Darras says, pay attention to the hard facts:
· Research your LTC purchase thoroughly
· If you have assets to cover rising medical costs, LTC may not be necessary
· Choose the right type and amount of care
· Determine if your policy should kick in as an add on to your disability policy
· Know the carrier’s history, choose one with the highest financial rating and the lowest customer complaints
· Will the carrier be in business when you need your benefits or have they low balled the market to gain market share?
· How many premium rate increases has the carrier sought in the last ten years and why?
· Understand your benefit categories
· Be sure to understand in detail in your carrier’s definition of the activities of daily living (ADLs)
· If you are wrongfully denied your benefits, know your legal rights and remedies
· Don’t give up and find competent legal counsel

For more information see www.darrasnews.com or call 800-458-4577. Go to www.savemyltc.com and see a textbook example of how you may get cheated out of your long-term care.....The Conseco Trust.

Presidential Candidates Are Overlooking Senior Health Insurance

With the Conseco (NYSE:CNO) Trust threatening to set a devastating precedent for all Long Term Care policyholders, when will Obama and McCain start talking about health insurance for our senior citizens?

WHAT YOU NEED TO KNOW - THIS IS NO JOKE

Long Term Care is the family crisis for the 21st century
3 out of 5 people will need LTC…2 out of 5 will require nursing home facilities
70-80% of nursing home residents deplete their assets within 12 months
Right now more than 12 million people need LTC
1,600,000 million people are in nursing homes
35 million people today are over 65 – or 13% of our population
By 2030…64.6 million people will be 65 or older
By 2040…there will be more people over 85 than there are today over 65
There are 72,000 people over 100 today and that sector will triple by 2020
Those of us born between 1946 and 1964 are BABY BOOMERS
1 out of 4 BABY BOOMERS are over 50 and soon will be SENIOR BOOMERS
Some of us are in the SANDWICH GENERATION…Caring for our kids…and caring for our parents
People are living longer…in 200 years we’ve doubled our life expectancy
Banking on Social Security?
Insolvency by 2019?
42 workers supporting each retiree in 1945
3.4 workers supporting each retiree today
By 2030…2 to 1
How about Medicare?
Payments exceded Medicare income in 2004 for the first time in history
Covers only 9.4% of all nursing home care expenses
How about Medicaid?
You have to be indigent…