Hi, I'm Billy Gwaltney and this is the CYA podcast. This show is for the physician who understands the importance of protecting everything you've worked so hard to achieve. Each week I'll bring you tips and advice to help you cut through the clutter and misinformation and show you exactly what you need to preserve your income and way of life. If you're ready to achieve the peace of mind that only financial security can bring, let's get started.
(00:28): Welcome to today's episode of the cover, your assets podcast. This is Billy, Gwatney your host, and I'm excited to be with you as always today. Our topic is explaining the Ameritus guaranteed renew premium option in working with thousands of physicians across the country and helping them with their specialty disability coverage. One of the top carriers is Ameritus a M E R I T a S and they offer physicians two fixed premium choices. One is more expensive than the other are. And a lot of clients like the less expensive one, but it's not for everybody. So I want to cover what this means today. The more expensive premium option is called non cancelable and guaranteed renewable. And what that means is that until age 65, your policy cannot be canceled, cannot be added. The definitions can't be changed, and the premiums cannot be increased. Okay? That's non cancelable and guaranteed renewable.
(01:31): All of the top companies offer that premium option. And that is the more popular option you can attach the trainee discount to that rate, but whatever the resulting rate is, it can never be adjusted under any circumstance by the company. Again, as long as the premiums are paid, the guaranteed renewable option is an additional 15% discount, 15 or 16%, depending on the situation where it says until you reach 8 65, your policy cannot be canceled. The debt definitions cannot be changed. Restrictions cannot be added as long as you pay the premiums on time. However, the company emeritus reserves the right to change or increase the premium rates by occupation class. And so the change would apply to all policies of that same form, that type of contract and in class for your particular state that the policy was purchased in. Okay. Now the new premium would be based on your original issue, age and your occupation at the time you, you bought the policy.
(02:36): So what this means is that if you have this premium option and emeritus has bad claims experience with your occupation, class and state, that they could petition the department of insurance, the regulators in that state to raise the rate for everyone in that occupation class. So when you bought your policy, your specialty at the time you purchased it is assigned an occupation class where actuaries come up with these occupation classes based on how they assess risk for different occupations. And so whatever occupation class you're in is the class that your policy keeps for the life of the policy. And if that occupation class needs to have the premium adjusted in your particular state, where you bought the policy, not where you live now, but where you bought the policy. Then if you have the guaranteed renewable rate, your rate could be increased. Now what's important to factor into this is that emeritus has been selling disability policies to the marketplace for approximately 55 years or so as of the time of this recording, and they've never had a rate increase in the past.
(03:45): So the guaranteed renewable rate has never been increased over their entire history. So they have a clean track record and to do the increase, they would have to get regulatory approval. So it's not something where they can sneak in an announcement at four 30 on Friday afternoon when no one's paying attention. And the rate jumps up starting Monday, they have to get approval. And that's a red tape nightmare. They have to justify the increase. And depending on the state, that can be a long process. Now, technically there's no cap to the amount of the increase if they did do the increase. So if you have a guaranteed over rate, they, they can raise it by any amount they need to. But there's another issue called adverse selection. And what that means is that when you buy your disability policy, as long as you pay the premiums, they have to perform, but you can walk away at any time.
(04:36): So it's not like a mortgage where they've got you trapped and they can do whatever they want. They know that because of adverse selection, if they do raise the rate, adverse selection is gonna kick in and healthy policy holders are going to leave. They're gonna look for cheaper alternatives and the less healthy policy holders, perhaps the very policy holders that kind of cause the issue to begin with are gonna typically stay because they have to, they don't have options. And so they're gonna pay the higher rate. That's better than self-insuring. And so it can actually raising the rate can actually make the problem even worse than it was when they started, because the healthy people leave, the ones they need to stay in order to offset the higher risk would actually leave the people, making the risk are hire, are gonna be the ones that stay.
(05:24): And so I've talked to actuaries and an actuary in particular at Ameris who said, Hey, you can't fix a pricing issue retroactively. You can only deal with it going forward. So what they're more likely to do is if that occupation class has bad claims experience to the rate for that state and that occupation class for new policy holders coming in. Okay, as opposed to say, to going back and penalizing the people that are paying the lower rate now. So you have two options with emeritus. You have a discounted rate. If you're a resident or fellow, you can get discounted rate and it can have the non cancelable and guaranteed renewable premium that can never adjust or they'll add an additional 15 or so percent discount to the trainee discount where they make a trade and say, we can raise the rate for your occupation class by state.
(06:15): Again, it's never happened before because of adverse selection. It is a pretty small risk. A lot of our clients like this option because 15% adds up over a 30 or 35 year career or lifespan of having a policy. Now I'm not saying this is for you. I'm not saying this is for everyone, but in working with physicians and talking with them and kind of allocating or deciding where their premium dollars should go and how to make sure they don't overpay for their insurance, but yet don't cut corners and definitions and the amount and so forth. A really potentially attractive sweet spot is to consider the guaranteed renewable rate is at least something you ought to know about as a way to save an extra fee, 15% in addition to whatever trainee discounts that are out there as well. Hopefully whoever you're working with understands this and can walk you through that process. I'd be happy to talk with you. Answer questions about your, your specific situation. Please feel free to reach out and text me to arrange a conversation. My number is 7 0 4 2 7 0 2 3 7 6. Again, that's 7 0 4 2 7 0 2 3 7 6. Until we meet again, this is Billy Ganey. Thank you as always for carboning out a few minutes, take care.
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