The Ugly Truth About Conseco’s Senior Trust

Canseco’s precedent setting Trust, recently approved by Pennsylvania Insurance Commissioner Joel Ario, will devastate 144,000 senior citizens, says Frank N. Darras, the nation’s leading disability and Long-Term Care insurance lawyer.

Darras says senior policyholders need to know where they stand. Unbelievably, they haven’t yet been told that their policies were put into this trust. One would think, by calling it a trust, there would be safeguards in place to protect them. There are none.

“Seniors weren’t warned or even told about the trust. Letters sent to Pennsylvania Insurance Commissioner Ario seem to have been overlooked or ignored, including those of other state insurance commissioners who asked for a public hearing,” says Darras. “Without warning, these seniors have been shuffled off to Pennsylvania. Now their policies are going to be managed by a group of Trustees they never bargained for.”

What happened to policyholder peace of mind? The trust and confidence in their billion dollar insurance company, backing their policies and assuring there would be money to pay their claims, has vanished, says Darras.

There are 144,000 policyholders, on fixed income who will face five stiff premium rate increases in the next 5 years, says Darras.

The Future Math Looks Simple:

The present value of the five future rate increases is $300-400 million — seniors can expect their policy to cost a minimum of $3000 to $5000 more than it does today.

Here Is The Mathematical Truth:

Unfortunately, simple math won’t work for these seniors. At least 25% of the policyholders are already on waiver of premium as their spouse has died or is on claim. That means that 36,000 policyholders will never pay a penny more in premiums. Over the next 5 years as more policyholders go on claim or their spouses die another 20% or 28,800 policyholders will pay no additional premium. This will leave 80,000, yes, eighty-thousand, seniors to shoulder $300-$400 million of premium, says Darras.

Is Wal-Mart Hiring?

What are these seniors going to do to raise this kind of money? Get a part-time job? Have a bake sale? Where are these folks going to raise $5,000 more per year to keep these policies in force? Remember, these are your parents and mine and $5,000 a year more, on top of their existing premiums will bring these proud folks to their knees, says Darras.

The Promise to Care, Vanished Through a Corporate Loophole

What happened to the peace of mind and security Conseco promised these policyholders when their policies were taken over from American Travelers Life or Transport Life?

Now, with fancy legal work, Conseco is gone! Once the company contributes stock and a one time payout of $175 million, they will walk away.

— No further obligation — No further funding — No further capital contributions — No exposure — No accountability — No responsibility That is wrong on every level, says Darras.

“Conseco promised the moon, strung paying seniors along and invested every premium dollar they got. Now, when our seniors are too old, too sick and uninsurable their coverage will be unaffordable.”
Conseco should be corporately ashamed, says Darras. This closed block of seniors have been dumped into a self insured trust which is about to begin feeding on itself.

What a sad state of corporate loop holing. It may be legal, but cheating seniors, is dead wrong.