by helpyouguys » Mon Jul 19, 2010 03:49 pm
Ever think to yourself that maybe you should get affordable life insurance, but haven't actually yet jumped on that thought and made it happen? A lot of people have considered doing the same. Some have actually tried it. Most others have gotten bogged down with the negatives somewhere and never started.
Hmm. Are they really valid reasons? Did they really consider the positive side? Did we look at the "pro" side or simply the "con" side? Before we let the negatives rule, the positives deserve a reasonable hearing. Let's look at 5 reasons for you to get affordable life insurance sorted out right now, and stop delaying any longer, or procrastinating when actually getting the situation satisfactorily resolved is much easier then you might think.
Lets take a look at those reasons in turn...
1. First, you will be doing your best for your family in an extremely tangible manner, and will no longer be faced with the thought of what will happen to them if you aren't about to take care of them. Sure, I am aware of your objection that you will have to spend out money on this, that times are tough, budgets are tough, and that this is an expense that you could well do without. Yes, this is a valid observation, but look at it this way, If you don't get this sorted out then you will be faced with the prospect of having your family go uncovered and not being able to pay the bills. Not a nice thought. In addition, consider that it is actually much cheaper then you might realise to get this sorted out. And it becomes clear that this isn't a good reason not to act
2. Second, that whilst you may think of life insurance as a luxury, in reality it isn't, and you need to get it just as readily as you would pay for your gas bill. It is simply a normal expense that has to be paid. The primary reason for that could be that you need a slight mindshift in the way you look at life insurance. But nevertheless, you should bear this in mind. Plus it isn't as hard to sort out as you have been told
3. Third, once it has been sorted out then you can forget all about it, and get on with the business of life. And in addition its nice to know that you have done your part in securing the future of your family!
4. Fourth, the range of insurance policies that are available is now much wider, and so you can get whole life insurance, term life insurance or many others. So you can really get one that is tailor made to your circumstances.
5. And Fifth, you can then move onto something more important once you have arranged it. You can get the affordable life insurance cover in under 10 minutes, so it is hardly an arduous process!
Within all of the above info lies a very good group of reasons in favor of getting affordable term life insurance sooner rather than later.
If you look at all the reasons and evaluate them, you will have to admit that a very compelling case can be made for beginning to consider how you can get this particular aspect of your financial affairs arranged, and not have to unduly dwell on it.
Just consider it. Maybe, just maybe, you really, in all seriousness, should get onto the internet right now and at the very least see the wide range of policies that are available, and how they could potentially do a good job of protecting your loved ones.
Hmm. Are they really valid reasons? Did they really consider the positive side? Did we look at the "pro" side or simply the "con" side? Before we let the negatives rule, the positives deserve a reasonable hearing. Let's look at 5 reasons for you to get affordable life insurance sorted out right now, and stop delaying any longer, or procrastinating when actually getting the situation satisfactorily resolved is much easier then you might think.
Lets take a look at those reasons in turn...
1. First, you will be doing your best for your family in an extremely tangible manner, and will no longer be faced with the thought of what will happen to them if you aren't about to take care of them. Sure, I am aware of your objection that you will have to spend out money on this, that times are tough, budgets are tough, and that this is an expense that you could well do without. Yes, this is a valid observation, but look at it this way, If you don't get this sorted out then you will be faced with the prospect of having your family go uncovered and not being able to pay the bills. Not a nice thought. In addition, consider that it is actually much cheaper then you might realise to get this sorted out. And it becomes clear that this isn't a good reason not to act
2. Second, that whilst you may think of life insurance as a luxury, in reality it isn't, and you need to get it just as readily as you would pay for your gas bill. It is simply a normal expense that has to be paid. The primary reason for that could be that you need a slight mindshift in the way you look at life insurance. But nevertheless, you should bear this in mind. Plus it isn't as hard to sort out as you have been told
3. Third, once it has been sorted out then you can forget all about it, and get on with the business of life. And in addition its nice to know that you have done your part in securing the future of your family!
4. Fourth, the range of insurance policies that are available is now much wider, and so you can get whole life insurance, term life insurance or many others. So you can really get one that is tailor made to your circumstances.
5. And Fifth, you can then move onto something more important once you have arranged it. You can get the affordable life insurance cover in under 10 minutes, so it is hardly an arduous process!
Within all of the above info lies a very good group of reasons in favor of getting affordable term life insurance sooner rather than later.
If you look at all the reasons and evaluate them, you will have to admit that a very compelling case can be made for beginning to consider how you can get this particular aspect of your financial affairs arranged, and not have to unduly dwell on it.
Just consider it. Maybe, just maybe, you really, in all seriousness, should get onto the internet right now and at the very least see the wide range of policies that are available, and how they could potentially do a good job of protecting your loved ones.
Posted: Wed Nov 17, 2010 07:12 pm Post Subject:
Max,
I spoke to someone at GHLIGA and they told me that I needed to speak to someone at the National Association 703-481-5206. They said that they wouldn't have the answer. They would know how much they paid on each policy and the coverage amount on each policy, but they would have no way of knowing what was paid above this limit. They suggested possibly contacting the NAIC.
What they said was that since the policy owner claims got paid first, the only way that a policy wouldn't get paid 100% is if a company had more policy claims than assets.
Alas, I still don't know if the claims were paid 100%.
It's hard to imagine a company having more liabilities than policy claims.
Posted: Wed Nov 17, 2010 07:24 pm Post Subject:
Max, as I research this further, I see that Aurora Life took over all of the life insurance policies. I agree that they wouldn't take over the policy of a dead person.
If a policy was taken over by Aurora Life, it would be paid at 100%, wouldn't it? If a person was dead, they would be in the front of the line for claims, so I would think that they would be paid 100%. I still can't figure out who wouldn't be paid 100%.
The more that I look into this, the more that it would not surprise me if I was wrong, but I'm still looking for some proof that I'm wrong.
Posted: Thu Nov 18, 2010 03:23 am Post Subject:
However, since the Guaranty Associations aren't funded, they don't provide much benefit if there will be wide spread failure of big insurers.
The Guaranty Associations are funded. They assess insurers a percentage of their insurance premium volume written in a given state to pay the expenses of the board and claims, if necessary. Commonly, they can assess insurers up to 2% of their annual premium volume.
It's true in the sense that they aren't funded by the state or Fed Gubmints.
InsTeacher 8)
Posted: Thu Nov 18, 2010 06:02 am Post Subject:
Executive Life may have had $10,000,000,000 of liabilities, but if I'm not mistaken, the death claims would have jumped to near the front of the line in terms of payments.
That's also true, but when you add up all the cash values, all the death claims, all the annuities (whether in the accumulation or distribution phase), etc., as part of the liabilities, the assets of the company were not nearly enough to cover them all. Remember, Executive Life had most of its money playing the junk bond game with Michael Milken and Drexel, Burnham, Lambert. When those bonds turned from junk to waste, there was nothing to sell/collect.
That's where the Guarantee Associations come into play. The few true assets were the company's active policies (their cash flow, really) and the real estate they owned. When Aurora took over the policies, it removed those from under the umbrella of the Guarantee Associations. All they had to pay, really, were death claims and annuity benefits.
I agree that they wouldn't take over the policy of a dead person.
OK, so if we're in agreement, then you have to acknowledge how the Guarantee Associations operate. By state law, the "claims" payable are limited. Each state has its own limits. California, unlike most other states, limits claims to 80% of the face amount/cash value/present value of annuity benefits. But not to exceed $250,000 in death benefits, $100,000 in cash value, and $100,000 in annuity benefits. Most states pay 100% up to $250,000 or $300,000, and a couple pay a bit more. But you can be sure that no $1,000,000 policies were paid at face amount.
Many people with Executive Life policies lost money. Just as they did at the same time when the S&Ls also began failing. Also in California, Lincoln Savings and Loan was encouraging persons to divvy up their savings into multiple CDs at different LS&L branches "to get around the FSLIC limit of $100,000 per account." They deliberately misled people into believing that accounts in different branches were treated as separate, when the fact was that all accounts with a single institution are considered one account (when tied to only one depositor). Lots of folks lost 50 cents or more on the dollar when the FSLIC could not cover their claims 100%. And we sometimes speak of the Guarantee Associations as "like the FDIC for insurance companies.
As InsTeacher has said, the Associations ARE funded with life insurance company "contributions" (1% of premiums in California). But if an Association runs out of money to pay even the statutory claim amounts, then it has the power to "assess" all the member insurers a share of the cost to complete the claims payments. But they cannot, by law, pay more per policy than what is allowed. So, no, they do not pay more than the statutory limit. They do receive most of the money that develops from the actual liquidation of the insurer and the sale of its assets (such as a book of business to another insurer).
However, after paying all claims, if additional money develops later from other sources (such as legal judgments), then each policy may be granted a prorata share of the additional proceeds.
In the case of Executive Life, I believe there was a class action that most policyholders joined. They are definitely limited to what the court decided their compensation would be. The remaining policyowners that opted out of the class action, are under a different umbrella, and they are continuing to obtain additional monies as they are recovered from a variety of sources. I can't say for sure, but I don't think any of those are related to death claims.
Posted: Thu Nov 18, 2010 10:35 am Post Subject:
The Guaranty Associations are funded. They assess insurers a percentage of their insurance premium volume written in a given state to pay the expenses of the board and claims, if necessary. Commonly, they can assess insurers up to 2% of their annual premium volume.
It's true in the sense that they aren't funded by the state or Fed Gubmints.
No, they are unfunded. They don't assess insurers a percentage of their insurance premiums. They have the power to assess insurers a percentage of their premiums. These are two very different things. They don't assess before a failure. Insurance companies do not pay the guarantee association on an annual basis. They get assessed after their is a claim.
In other words, if there was a large insurance company failure today, the Guaranty Associations could not reach into their coffers to pay claims. Instead, they would assess the insurers and then pay.
Posted: Thu Nov 18, 2010 10:44 am Post Subject:
Max, we are in basic agreement with how this works.
Everything that you are saying makes sense and it explains why it is very possible that there were some death claims may not have been paid at 100%. What I'm still missing is something specific that lets us know that there were death claims not paid at 100%.
I'm not making any claims about what happened to the cash values and annuity values. I'm only talking about life insurance death benefits. Policies in force went to Aurora, so aren't we only talking about deaths that had occured, but the claims had not yet been paid.
It seems to me that Executive Life would not have needed that much in assets to be able to pay these.
Again, I'm not asserting that I'm correct. I'm admitting that I may be wrong. I'm just still looking for proof that I'm wrong. Proof that I'm correct would work also. I'm still unable to get proof in either direction.
Posted: Thu Nov 18, 2010 11:20 am Post Subject:
Max, the numbers will show that the Guaranty Association didn't pay the entire amount. It won't show whether the amount got paid or not.
Look at the London Pacific info. I may be reading this very differently than you. My interpretation is that if London Pacific had no assets and no other carrier took the policies, it would have cost the Guaranty Association approximately $4,500,000 and approximately $1,500,000 of claims would not have been paid.
However, instead, all of the life policies were taken over along with the majority of annuity holders and the Association has only had to pay out (or put in reserves) $200,000. It certainly appears on this one that everybody was made 100% whole and the Association paid no death claims.
I'm still missing on the Executive Life "thing", how death claims wouldn't be paid in full. According to the Guaranty Association ALL life policies were transferred to Aurora life. So, wouldn't the only issue be for policies in which somebody died between the time that the company went under and Aurora took over? If this is the case, it couldn't be that many policies and Executive Life did have assets.
Posted: Thu Nov 18, 2010 04:33 pm Post Subject:
I'll see what I can find. It will probably take several days.
In the meantime, I found some information posted on the South Carolina Life, Accident, and Health Insurance Guaranty Association's website:
LONDON PACIFIC LIFE & ANNUITY INSURANCE COMPANY (North Carolina) Ð This company was placed in liquidation 9/30/04. The company had 18 life and 146 annuity policies in this state. Total obligations were reported to be in excess of $6,000,000. Of that $6,000,000 in company obligations approximately $1,500,000 appears to be in excess of Association limits. The life policies were placed with another carrier prior to liquidation. Annuity policyholders were offered the option to exchange their London Pacific policy for a Hartford policy, to cash surrender, or to remain with the Association. Most policyholders went with Hartford. To date the Association has incurred $29,600 in expenses, $171,992 in annuity reserves and has received $354,643 from the SC deposit.
http://www.sclifega.org/status.php
You have to read and understand what it is saying. The Guaranty Association was responsible for 164 contracts with liabilities of $6,000,000, but some $1,500,000 of that EXCEEDED the statutory claims paying ability of the Association. It does not identify any death claims that were or were not paid, so it does not answer the question precisely. But as far as the annuity contracts were concerned, if persons opted to leave their claims with the Guaranty Association and not accept the Hartford policies they were offered, they lost money. There was probably some loss in the exchange of contracts with Hartford also (probably limited to the same amount the Guarantee Association was liable for).
So not a perfect answer, but a start. Follow the link and see what is there. It's much more explanatory than most others (it deals with how the SC Guaranty Association dealt with its state's policyholders as part of the overall liquidation of a company. You'll see Executive Life in there, with some numbers that, if you can understand them, show you that people LOST MONEY (although, again, it does not specifically identify death claims).
With enough looking, I'm sure I'll find what you need to be satisfied.
Posted: Thu Nov 18, 2010 10:00 pm Post Subject:
I tried to post this at 9:45am Pacific Time, but there was something wrong with the site server and I could not get connected.
Alright. I've done some "homework" and now you have to do the reading and come to an understanding. Download and read the following "Annual Report" of the Illinois Life and Health Guaranty Association.
www.ilhiga.org/documents/IL%202009%20Annual%20Report.pdf
In the numerous discussions of insolvent insurers within the reports 54 pages, you will repeatedly see remarks about the making payments based on the "statutory obligations" of the Association.
If you cannot accept that that means exactly what state law says, that no claim is payable by the association beyond the statutory limit, then I don't know what else to tell you. But I understand it to mean that in Illinois, $300,000 is the maximum death benefit payable by the Association. Policies up to that face amount are paid in full, policies with face amounts in excess are capped at $300,000 -- the beneficiary of a policy with a $350,000 face amount gets $300,000. A beneficiary of a $1,000,000 policy gets $300,000.
If, at some later point in time new assets are recovered from the "estate" of the deceased/insolvent insurance company, they are first refunded to all insurance companies that may have been assessed additional sums to cover the claims of the Association for that insolvent company. If no such assessments were made, the money can be used to offset the expenses of the Association that were not recovered previously. If money still remains, then it can be shared prorata with all policyholders whose claims were statutorily limited. Rare, but it does happen, as you will read.
Now, I have to move on to the things that I get paid to do. Enjoy the reading . . . I did!
(And I'm going to get paid $0.45 for something I usually charge $30+ per hour for, plus expenses, and for which my attorney clients rebill their clients at a cost of $100-$200 per hour. But it was worth the $45 I did not earn.)
Posted: Sat Nov 20, 2010 01:03 am Post Subject:
Max, I had also posted, but my posts didn't show up.
From my reading and from what you've posted, I am now in agreement that they won't/can't pay more than the maximum through the Guaranty Association.
I also believe that confidence in the industry is of critical importance and if people had doubts about death claims being paid, it would cripple the industry.
We are still lacking what I'm truly trying to find...proof that life insurance policy holders have always had their death claims paid (or have not).
Look at the London Pacific info that you posted. I think that we have a different interpretation.
Let's pretend for ease that it was all life insurance policies. From the information given, we would have no idea if anybody was in danger of not having their policies paid. I interpret the data as follows:
Total liabilities= $6,000,000
Maximum exposure of state guaranty association $4,500,000.
Insureds could possibly be out $1,500,000
What's missing? The assets of the insurer. There could easily be enough assets to cover the death claims.
In fact, it doesn't look like any life policyholders lost a penny since all policies were transferred to another carrier.
Isn't this the same thing with Executive Life. All life policies were transferred to Aurora. Life claims tend to get paid quickly. With all of the policies being transferred to Aurora, the only claims that seem like they'd be an issue would be the policies in which someone died after the company failed, but before the policies got transferred. I would GUESS that Executive Life had enough to pay these claims.
My guess can certainly be wrong, but I'm still unsuccessfully searching for something that shows that I'm wrong as opposed to the stuff that shows that I could be wrong.
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