NU Online News Service, Dec. 22, 2003, 6:08 p.m. EST – Agents in Wisconsin are exploring proposals that could open up new commission income sources.[@@]

One administrative rule change would allow agents to receive full commissions when they sell replacement long term care insurance policies.

“Wisconsin is one of only a couple of states where agents don’t get full commissions” for LTC replacement policies, notes Susan Linck, executive vice president of the Madison, Wis.-based Wisconsin chapter of the National Association of Insurance and Financial Advisors.

“The rule is a holdover from the time when regulators were worried about agents churning long term care policies,” Linck says.

Churning is the practice of writing one policy to replace another one, even though the existing policy doesn’t need to be replaced. Wisconsin regulators, concerned about this abuse, have limited the commissions an agent can earn on a replacement policy.

“The rule is damaging to consumers because many old LTC policies have restricted provisions,” Linck says. “Newer policies can give consumers more bang for the buck. But there’s no incentive for the agent to upgrade the person.”

On the health side, the Wisconsin NAIFA chapter has joined a coalition of other industry, agent and employer groups, including the local unit of the National Federation of Independent Business, Washington, to ease Wisconsin health care mandates.

For instance, under Wisconsin law, all health insurance policies must cover fertility drugs, reconstructive surgery after cancer and services provided by a chiropractor, optometrist or nurse practitioner if the policy would cover the same services if performed by a physician or other medical specialist.

These mandates add to the cost of coverage and make it difficult for many small employers to offer health coverage, NAIFA maintains.

“We’re finding small employers would be willing to cover catastrophic illness, if it weren’t for the mandates,” says Linck.

The Wisconsin NAIFA chapter also is seeking to convince the legislature to modify the state’s statute on cash-value life insurance to protect death benefits from the policyholders’ creditors. Current law makes almost all of the proceeds available to creditors, Linck notes.

“The surviving family has no protection,” she says. “The purpose of the policy is gutted, and it penalizes the family. We’re trying to modernize that.”