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: Fri Nov 05, 2010 11:19 am Post Subject:
If you mean entirely without a death benefit, then you are correct. But beneficiaries have been left with less than the full face amount of insurance when the death claims have been paid by the state Guarantee Association.
I know of zero examples of someone not getting paid 100% of a death benefit on a life insurance contract when an insurance company became insolvent. Can you please give us one example.
Posted: Mon Nov 08, 2010 01:55 am Post Subject:
Max, I wanted to bump this so that we could get a response from you.
Posted: Wed Nov 10, 2010 05:35 pm Post Subject:
If you mean giving you the name of a specific person, the answer is no, and if I could, I wouldn't, it's unethical.
But, in the failure of Executive Life Insurance Company, I can tell you that death claims were not paid at 100%, but as the State of California continues to receive money from various lawsuits surrounding the whole fiasco, people who received death benefits are continuing to receive little bits of additional money from time to time. And they will likely never see 100% of the policy face amounts.
And that's not the only example. You can do the research yourself to discover the facts. But here's the reality:
When a death claim goes to a Guarantee Association and is paid by the Association (not taken over by another insurance company, which happens frequently), you can believe it will ONLY be paid according to the state laws governing the Association. Unlike other states where the numbers are slightly different, but not much, California's Life and Health Insurance Guarantee Association will only pay a maximum of $250,000 on any one life (and, again, in California, that payment may be further limited to a maximum of 80% of the face amount), UNLESS . . . there are additional proceeds available that, when divided amongst all the claims payable, would allow everyone to receive the same dollar-for-dollar increase (not a percentage increase).
Other states have a maximum of $300,000 (or more, and without the 80% limitation). So if a $500,000 death claim came in to, say, the Colorado Guaranty Association, and it did not have enough money from the liquidation of the insurance company to pay all claims at 100% of the face amount, and it could not find another insurance company willing to take over the claims at 100% (or could not obtain reinsurance to cover the claims at 100%) then, as the National Organization of Life and Health Guaranty Associations (NOLHGA) says on one of its webpages ( http://www.nolhga.com/policyholderinfo/main.cfm/location/questions ):
Are all policies fully protected?
Not always. Like the FDIC, state guaranty associations have maximum benefit limits. These limits are established by state law and can vary from state to state, but most states provide at least:
* $300,000 in life insurance death benefits
* $100,000 in cash surrender or withdrawal values for life insurance
* $100,000 in withdrawal and cash values for annuities
* $100,000 in health insurance policy benefits
The overall benefit “cap” in most states for an individual life is $300,000, although some states have maximums that are much higher.
If my policy values are higher than the benefit limits, do I lose that money?
Not necessarily. The value in excess of guaranty association benefit limits is eligible for submission as a policyholder claim against the estate of the failed insurance company, and the contract holder may receive distributions as the company’s assets are liquidated by the receiver.
And here's what the actual Colorado statue (10-20-104) states (in pertinent part):
(3) The benefits for which the association may become liable shall not exceed the lesser of:
(a) The contractual obligations for which the insurer is liable or would have been liable if it were not an insolvent insurer; or
(b) (I) With respect to any one life, regardless of the number of policies or contracts with that insurer:
(A) Three hundred thousand dollars in net life insurance death benefits, and no more than one hundred thousand dollars in net cash surrender and net cash withdrawal values for life insurance;
(B) For health insurance benefits: One hundred thousand dollars for coverages not defined as disability, basic hospital, medical and surgical, or major medical insurance, including any net cash surrender and net cash withdrawal values; three hundred thousand dollars for disability insurance; or five hundred thousand dollars for basic hospital, medical and surgical, or major medical insurance;
(C) One hundred thousand dollars in the present value of annuity benefits, including net cash surrender and net cash withdrawal values; or
(D) With respect to each payee of a structured settlement annuity, one hundred thousand dollars in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal values.
(II) The association shall not be liable to expend more than three hundred thousand dollars, in the aggregate, with respect to any one life under sub-subparagraphs (A) to (D) of subparagraph (I) of this paragraph (b); except that, with respect to benefits for basic hospital, medical and surgical, and major medical insurance under sub-subparagraph (B) of subparagraph (I) of this paragraph (b), the aggregate liability of the association shall not exceed five hundred thousand dollars with respect to any one individual.
(4) The liability of the association is strictly limited by the express terms of such covered policies and contracts and by the provisions of this article and is not affected by the contents of any brochures, illustrations, advertisements, or oral statements by agents, brokers, or others, used or made in connection with the sale of such covered policies and contracts. The association is not liable for any extracontractual, exemplary, or punitive damages, attorney fees, or interest other than as provided for by the terms of such covered policies or contracts. (emphasis added)
So, tell me what YOU think it means? This last paragraph says, to me, no matter what anyone else thinks or says, the limits are the limits unless we can find additional money from the liquidation of the insolvent insurance company to pay more money to each claimant. Because that's the truth.
For additional help in understanding what the Guaranty Associations are all about, and how things might work out, get the PDF from NOLHGA at this address:
http://www.nolhga.com/resource/file/2009GABrochureFINAL.pdf
Posted: Wed Nov 10, 2010 06:22 pm Post Subject:
And that's not the only example. You can do the research yourself to discover the facts. But here's the reality:
Max, I'm asking the question because in my research, I have failed to find any examples of a person not getting 100% of their life insurance death benefit due to an insurance company insolvency.
If you can't point us to a person, how about pointing to an article or a court case, or anything? I'm not claiming that it can't happen. I simply can't find an example of this ever happening.
So, according to my research, I'm correct. If your research shows differently, let us know. Many life agents believe exactly what I believe. "All death claims of Executive Life were paid 100%."
If I'm wrong, that's fine, but I want to know. Please show me that I'm wrong. I would greatly appreciated it. If you can't, just let me know that.
Posted: Wed Nov 10, 2010 06:29 pm Post Subject:
So, tell me what YOU think it means? This last paragraph says, to me, no matter what anyone else thinks or says, the limits are the limits unless we can find additional money from the liquidation of the insolvent insurance company to pay more money to each claimant. Because that's the truth.
I think that it means exactly what it says. It doesn't say, "the limits are the limits."
It says, "The liability of the association is strictly limited..."
This means that they are not liable for any more than the guarantee. That DOES NOT mean that they can't pay more than what is guaranteed. It says that they aren't obligated to do so.
It's in the industries best interest to make sure that all legitimat death claims on life insurance policies always get paid. As has previously pointed out, many believe that this has always been the case. If you have any example with any U.S. insurer that goes against this, please clue the rest of us into this.
Posted: Thu Nov 11, 2010 05:22 am Post Subject:
It's in the industries best interest to make sure that all legitimat death claims on life insurance policies always get paid. As has previously pointed out, many believe that this has always been the case. If you have any example with any U.S. insurer that goes against this, please clue the rest of us into this.
Do you even know how the Guaranty Associations are funded? They don't assess member insurers to be able to pay claims in full, they assess member insurers to pay the claims up to the limit of liability.
They do work to try to get other insurance companies to take over policies, but they cannot force companies to take over claims.
As I have repeatedly stated, EXECUTIVE LIFE's failure has caused people to not collect 100% of their policy benefits. What more do you need. And Executive Life is not the only example. Just the biggest one.
Posted: Wed Nov 17, 2010 10:27 am Post Subject:
I know exactly how it is funded. It isn't. It is funded as is needed in the proportion that an insurer does business in that state. However, that isn't the topic here.
I'm not claiming that Executive Life's failure has allowed everybody to get 100% of their policy benefits. I'm claiming that DEATH BENEFITS FROM LIFE INSURANCE POLICIES were all paid 100%.
I can't find a single thing anywhere that shows that I'm wrong with my claim. If I'm wrong, I want to know about it.
You seem capable of asserting that I'm wrong, but incapable of backing it up. If you can back it up, please do so. If you can't back up what you are saying, let us know that.
I'm not asking you to admit that you are wrong. Heck, you might be right. I believe that I'm correct, but am unable to prove it. If I'm wrong, I want to know, but I can't just take you at your word. I have NEVER read anything about not all of their death claims being paid.
Posted: Wed Nov 17, 2010 10:38 am Post Subject:
Max, let me change what I'm asking slightly so that this doesn't come off as an argument. I've always believed that there has never been a death claim that hasn't been paid in the U.S. due to insurance company insolvency.
I could be wrong. I would like you or somebody else to point me to something concrete that shows me that I'm wrong. The Guaranty Associations rules are useless for this purpose because they only show that the possibility exists for a claim not to be paid.
Max or anybody else, do you have anything showing an insurance company failure and its life insurance death claims not being paid 100%. I don't and if I'm wrong, I want to know.
Posted: Wed Nov 17, 2010 04:53 pm Post Subject:
I've always believed that there has never been a death claim that hasn't been paid in the U.S. due to insurance company insolvency.
OK, now you're making a more sensible statement (and I've never regarded the discussion as an "argument", but one of trying to correct misinformation/set the record straight). But you're still wrong.
If you are talking about "NEVER" in the history of commercial life insurance in the US, then think about this: Why do we even have Insurance Guaranty Associations in the first place?
The answer must have something to do with insurance company insolvencies and not paying claims. But the first Life and Health Guaranty Association was not created until 1941 in New York State, and even the National Organization of Life and Health Insurance Guaranty Associations was not created until 1983.
And, although I cannot give you concrete examples from the period, I'm sure that during the Great Depression in the 1930s, when, following the run on the banks and depletion of cash in the economy, people turned to their life insurance companies for policy loans -- and the insurance companies could not come up with the cash, it caused more than one insurance company to become insolvent, go out of business, and not pay at least one claim. They were all casualties of federal monetary policies just like any other business, farmer, or citizen.
do you have anything showing an insurance company failure and its life insurance death claims not being paid 100%.
Because it was the largest such failure in California, I have repeatedly pointed to the EXECUTIVE LIFE debacle that left policyholders on the losing end of an insurance company insolvency (with the defunct company having $10,000,000,000 in LIABILITIES). The company was "conserved" by the CA Dept of Insurance in April 1991, and the order to liquidate came in December 1991.
Funny thing, the California Life & Health Insurance Guarantee Association was created in . . . 1991 . . . wonder why (the act by the legislature actually predates Executive's failure, and covers insolvencies occurring after 10-20-1990, but was nevertheless, prescient)?
Yes, most active policies were taken over by Aurora Life Insurance company -- but that did not happen until 1993 -- when the company was created out of thin air by Credit Lyonnaise, but even that company ran afoul of the CA Dept of Insurance for disguising its foreign ownership and control in violation of state law. The state has been trying to collect on a $2 Billion judgment in that case. And they've done a pretty good job.
But death claims that occurred just prior to or after the conservation of EXECUTIVE LIFE began were NOT PAID 100%. You can contact the California Life & Health Insurance Guarantee Association, or visit their website ( http://www.califega.org/ ) for more information. While there, you can find the page on "receiverships" that the CHLIGA has taken since its inception. The total is now at 38, beginning with Legacy Life Insurance Co of Nebraska in August 1991 (and just above the list, there is this statement from the CHLIGA:
Below is a list of insurance company insolvencies for which the California guarantee association has been activated to provide protection to California policyholders. Please be advised: this list may not include every insolvent insurer that has affected this state's policyholders.
(emphasis added)When the Guarantee Association is "activated", it means that POLICY CLAIMS are going to be handled by the Association. In order to raise capital to fund the payment of claims, ASSETS of the insolvent company are LIQUIDATED or SOLD to other insurance companies, before all other member companies of the Association are "assessed" to provide the additional funding required. Active policies are among the ASSETS that are sold. But when an insured dies, the policy ENDS -- it is no longer an ACTIVE policy but becomes another one of the company's LIABILITIES (the contract changes at the moment of death to an obligation of the insurance company to the beneficiary which is settled by the payment of the death claim), and it is unlikely that another insurance company will take over all of the death claims. Especially in a large failure such as Executive Life.
On another page of the CHLIGA website, it states:
Specifically, when a member insurer is found to be insolvent and is ordered liquidated, a special deputy receiver takes over the insurer under court supervision and processes the assets and liabilities through liquidation. The task of servicing the insurance company's policies and providing coverage to California's resident policyholders becomes the responsibility of the guarantee association. The protection provided by the guarantee association is based on California law and the language of the insolvent company's policies at the time of insolvency.
You don't have to believe me, but if you don't then you should contact the CHLIGA and ask THEM what life insurance death claims they have paid at 100% of policy face following the declaration of an insurance company as insolvent. Or you can contact the Guaranty Association in your state and ask them the same question.
If you want to talk to someone on the phone, the GHLIGA office is located in Beverly Hills, CA -- 323.782.0182. They actually answer the phone calls.
For some additional historical information about Insurance Guaranty Associations, see the article downloadable from the Pacific Research Institute at https://liberty.pacificresearch.org/docLib/20100209_HPPv8n2.pdf (it's actually an article about healthcare reform, which is excellent in itself, but talks briefly about the history and purpose of the guaranty associations on p.3 of 4 pages).
Posted: Wed Nov 17, 2010 06:48 pm Post Subject:
We have the Insurance Guaranty Associations in place primarily because they give confidence to the consumers and secondarily to make sure that there is an orderly way to make sure the claims get paid.
However, since the Guaranty Associations aren't funded, they don't provide much benefit if there will be wide spread failure of big insurers.
I'm looking hard, but I still can't find anything that indicates that any Executive Life death claims weren't paid at 100%.
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. So, what would matter isn't the amount of total liabilities, but whether they had enough in assets to pay the death claims and other things that get paid first.
Max, I hope that you keep up this conversation, because I really want to find out if I'm right and wrong and I still haven't seen anything that indicates and death claims weren't paid at 100%.
Add your comment