Lincoln Hikes MoneyGuard II Pricing by 10%, Puts Agents on Alert

Pending state approvals, Lincoln Financial Group will raise prices Monday on new sales of MoneyGuard II, the company’s popular linked-benefit product.

To qualify for Moneyguard II pricing before the changes take effect, agents must submit a completed application, signed and dated, to Lincoln before 6 p.m. EST today, the company said.

Pricing changes were made after a “thorough and in-depth analysis of all factors influencing pricing, including those related to persistently low interest rates,” the company said in a notice to agents.

Overall, pricing is increasing an average of 10 percent, the company said.

Single pay premium rates will increase between 2 and 11 percent, with an average increase of 10 percent, Lincoln said. Flexible premium rates will increase by a range of 8 to 18 percent, with an average increase of 14 percent.

It is the first price change to MoneyGuard II since the product was introduced three years ago, according to agent Jack Lenenberg in a blog item posted last month.

With new policies, LTC insurers appear to be making up for low interest rates.

Low rates make it difficult to earn returns necessary to pay for claims connected to expensive long-term care services, which can run has high as $80,000 a year in some parts of the country.

Over the past few years, with interest rates at record lows, insurers have not been shy about raising premiums on existing LTC insurance policies (LTCi) policies to make up for underpricing.

Other companies have exited the market as consumers veer away from stand-alone LTCi policies and toward hybrid products.

The average price a couple in their 60s could expect to pay for a new LTCi policy rose 6 to 9 percent in 2016 from 2015, according to the 2017 Long-Term Care Insurance Price Index.

LTC insurers paid $8.65 billion in claim benefits in 2016, an increase from $8.15 billion in 2015, the American Association for Long-Term Care Insurance reported.

Payment Options Proliferate

In February, Lincoln announced plans to expand payment options for buyers to allow them to spread the payments over a longer period.

Extending payment options is designed to help buyers absorb higher costs, but also shows that insurers are as serious about payment flexibility as they are about developing more flexible LTC products.

“Since the launch of MoneyGuard II, we’ve seen tremendous response in the marketplace to the payment flexibility this solution offers,” said Mike Hamilton, vice president, MoneyGuard product management, in a news release.

MoneyGuard II is a universal life insurance policy with a LTC benefit rider that accelerates the payment of a specified amount of death benefit to pay for covered LTC expenses.

Launched in 2014, MoneyGuard II contained product tweaks and pricing changes different from the first-generation MoneyGuard.

Under the new MoneyGuard II payment plan options, clients between the ages of 40 to 54 can extend payments up to age 65, the company said.

Lower Barrier to Entry

“The pay-to-65 option will likely lower the barrier of entry for consumers who may want to plan with an asset-based product,” said Steven M. Cain, director of sales with LTCI Partners in Los Angeles.

Clients between the ages of 55 and 72 will continue to have a choice of payment options up to 10 years, he company said.

Clients between the ages of 73 and 79 will have a new schedule of payment options. Starting at age 73, clients can choose options up to nine years, “grading down by one year at each subsequent age,” to three years of payments at age 79, the company said.

Single-premium payment options are still available.

“I really like the idea of more flexible premium payments and so does our financial advisor client base,” Cain said.

Sales of MoneyGuard rose 19 percent in the fourth quarter compared with the year-ago period as the product benefited from a “multichannel distribution approach,” said Lincoln CEO Dennis Glass in a conference call.

For the full year, MoneyGuard sales rose 12 percent to a record $214 million compared to 2015, Glass said.

InsuranceNewsNet Senior Writer Cyril Tuohy has covered the financial services industry for more than 15 years. Cyril may be reached at [email protected].

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Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. He can be reached at [email protected].