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: Mon Nov 22, 2010 03:19 am Post Subject:
The AIG insurers were never in the same category as Executive Life Insurance Company. None of them were ever close to being insolvent. Only the parent company was screwed up. Even the various states' insurance commissioners issued press releases to reassure their publics by letting them know that none of the American General insurance companies were considered insolvent and were not under any special regulatory oversight.
And it is not analogous to the discussion of Executive Life.
Executive Life wasn't insolvent when they were taken over. There was the fear that a run on the company would make them insolvent. Since they weren't insolvent at the time, why would any death claims not be paid?
What's your definition of INSOLVENT? I doubt that it matches that of the California Insurance Code under which the Commissioner was able to obtain a lawful order of Conservation (you can see it in Section 985 of the Insurance Code at http://www.leginfo.ca.gov/cgi-bin/displaycode?section=ins&group=00001-01000&file=980-989 ). Executive Life could not have been conserved if it did not meet that definition of insolvency -- it requires a court order, and that requires proof, not conjecture.
In his defense, Garamendi's subsequent actions relative to the bond portfolio that further exacerbated the problem -- for which he was excoriated by the media at the time (which often get their facts wrong or second-hand) -- have been proved to have been taken based entirely on fraud, concealment, and misrepresentations at the time . . . something that did not come to light until 1998, five years after the fact. While not blameless, he is not entirely at fault for his decisions made in 1991-1993.
No death beneficiary in the history of the U.S. life insurance market has ever been denied or shorted on a legitimate death claim payout
If you think that's true, then ask Accuquote.com to prove it, not me. What is Accuquote.com? An insurance agency -- nothing more, nothing less. (CA Insurance License #OB72515). The actual company behind Accuquote.com is BYRON UDELL AND ASSOCIATES, INC, 1400 S WOLF RD BLDG 500 WHEELING, IL 60090-6588. (216) 292-7900 -- Ask for Byron Udell, he's the Founder and CEO.
That doesn't confer any special knowledge on their part. What do you think their motivation for making a ridiculous statement (and unattributed -- you don't even give the URL where you found it) like that is? To sell more policies by making people think it's true.
Instead, read the Congressional Hearing testimony I cited above and see what the two policyholder witnesses were told by their attorneys about what was safe . . . and what they discovered was real. If there wasn't enough money to pay annuity claims, there wasn't enough money to pay death claims either. They don't say, "We'll pay all the death claims 100% and see what's left for anyone else." In an insolvency, claims have priority over other creditors, like bonds have priority over stocks. Cash values are claims, too.
But everyone in a class of creditors gets equitable treatment. You selectively choose to ignore this fact. The Guaranty Associations only pay claims when there's not enough money to pay all claims 100%. That's that's why life insurance claims paid by the Guaranty Associations are limited, so that the $1,000,000 policies don't take all the money and leave nothing for the "little guys". And it's precisely the reason CORPORATE owners of life policies cannot get more than $5,000,000 from the CA Life & Health Insurance Guarantee Association (and most others, as well). They could easily erode all of the money in a worst-case scenario without that limitation.
A former employer of mine, Citigroup, was described as being too big to fail. I never believed that, and I wasn't their employee when it nearly happened a couple of years ago either (ruining the value of their stock I still own). And now they've divested of nearly every insurance-related asset that was partly responsible for making them as big as they once were.
Travelers was spun off to form St. Paul Travelers several years ago, but now the St. Paul name lies in memoriam courtesy of the better name recognition that Travelers had (and Travelers bought back the right to the Red Umbrella from Citigroup years ago). More recently, Primerica's IPO several months ago was successful, and now they're just waiting for the right moment to unload their remaining stake in that organization.
I'm sure Sandy Weill, for whom I have great respect, regrets the realization of his lifelong dream to own the largest financial services company in the world -- because after he let Jamie Dimon go, and once he left the C-Suite, the whole company began it's downhill slide . . . because not even Robert Rubin, whom Sandy recruited personally, shared the vision Sandy Weill had for the company.
And, today, Jamie Dimon is riding high on the crest of the wave as Chairman and CEO of JPMorgan Chase, after it acquired his Bank One, because he knew and understood and has that same vision. Citigroup would (probably) never have gotten into as much trouble if Jamie Dimon had been there when Sandy left. (Notice that JPMorgan Chase needed absolutely none of the TARP money that was freely circulated among the big banks.)
That was the original plan. But Jamie and Sandy's daughter had a bad falling out in 1997 or 1998, and, as the saying goes, BLOOD is thicker than WATER, and even though Jessica Bibliowicz left before Jamie did, the damage was done.
Sorry, way too much digression. (Mostly grumblings about the value of my "C" shares.)
But history is important. And to say that no beneficiary in the history of the US life insurance market has ever been denied or shorted is not true.
I'll leave it to you to post the "facts" and, more importantly, the sources of the information, that you get from Accuquote.com/Byron Udell and Associates, and I'll take a look. And if I'm shown to be wrong, I'll be happy to let you know. 100% Guaranteed. (after all that's what the discussion is about, right?)
One final parting shot for your consideration:
Assuris, the Canadian national version of our individual state Guarantee Associations, was created in 1990, and proudly points to the fact that only three Canadian insurance company insolvencies have ever occurred (pales by comparison to the number of US insurance company insolvencies since then). http://www.assuris.ca (the actual link doesn't want to post properly because there is a ! between Insolvencies!OpenDocument -- so at the website, click on "About Us" and in the drop down, the last item is "Past Insolvencies" -- click on that to find the quote below).
They describe their coverage:
How Does Assuris Protect You?
If your life insurance company fails, your policies will be transferred to a solvent company. Assuris guarantees that you will retain at least 85% of the insurance benefits you were promised. Insurance benefits include Death, Health Expense, Monthly Income and Cash Value.
Your deposit type products will also be transferred to a solvent company. For these products, Assuris guarantees that you will retain 100% of your Accumulated Value up to $100,000. Deposit type products include accumulation annuities, universal life overflow accounts and dividend deposit accounts.
For a Tax Free Savings Account (TFSA) invested in an Accumulation Annuity, Assuris provides separate protection from other deposit type products. For TFSAs, Assuris guarantees that policyholders will retain 100% of the Accumulated Value up to $100,000.
The key to Assuris protection is that it is applied to all benefits of a similar type. If you have more than one policy with the failed company, you will need to add together all similar benefits before applying the Assuris protection. For a detailed table on adding benefit types together
In two of the three insolvencies, they were able to effect 100% restoration of benefits to policyholders, but in the third:
Sovereign Life
On January 18, 1993, a Winding-up order was granted against Sovereign Life, based in Calgary. At the time, Sovereign Life had 249,000 policyholders, 96% of whom were 100% protected by Assuris coverage. Of the remaining 4%, who incurred some losses, all retained at least 90% of their benefits. To facilitate transferring adjusted policy benefits to solvent life insurers, Assuris introduced the concept of proportional reinsurance. Assuris also established a life insurance company subsidiary to reinsure policy liabilities and maximize recoveries from the residual assets of Sovereign Life. Our developing insolvency experience helped to achieve a final cost of only $20 million.
Elsewhere on the Assuris website you can look at their "brochure" and see that their death benefit guarantee is the greater of $200,000 or 85% of the face amount of insurance. Very different than the various US guarantee associations.
There have been at least 68 US insolvencies since the National Organization of Life and Health Insurance Guaranty Associations began keeping track. There have been many more dating back to the inception of the US commercial life insurance industry in the 1840s. Now, I don't know if anyone can tell you how many, exactly, and I certainly can't tell you exactly how many death claims were not paid 100%, but it is reasonable to believe that it is way more than one.
And if that was not absolutely true, there would not be a need for the Guarantee Associations.
Posted: Mon Nov 22, 2010 03:52 am Post Subject:
You have continually said that statements include death benefit claims, but nothing that you have linked or copied has said that. You are making assumptions
And your posts have been based on what you have "heard". Not even an attributable statement from anywhere.
First, you couldn't accept that anyone lost money when Executive Life failed. Now you can't accept the fact that they were insolvent when they were seized. Even if I could give you the exact name of a person who received a diminished death claim, you'd probably say, "Prove it." or "Give me another."
So here's what I will attempt to do. I'm teaching a class the next two days, so I won't be able to make any telephone calls, but on Wednesday, I'll call the CHLIGA and talk to someone there and see if I can't get some facts and figures. I'll post whatever happens, yea or nay.
Posted: Mon Nov 22, 2010 12:37 pm Post Subject:
Max, I have NEVER claimed that nobody lost money when Executive Life failed. I KNOW that lots of people have lost money.
I said that all DEATH CLAIMS were paid 100%. I've said that I can't prove this claim, but that I also haven't seen any information that has disproved this claim.
I said that they were seized to prevent a run on them because that is from the information that you posted. I would think that a run on them would have caused them to become insolvent and ultimately, regardless, they would have become insolvent, but at the time that they were taken over, they were not insolvent. They were not at the point that they could not pay claims.
I already spoke to CHLIGA. Like I told you, they sent me to talk to the NOLHGA. NOLHGA told me that there is no way to know this information. They can tell what they paid on each policy, but don't know if people were made whole or not.
This isn't some argument in which I have any need to be correct. I'd be happy to be wrong. It makes no difference to me.
Posted: Mon Nov 22, 2010 12:44 pm Post Subject:
I know that Accuquote is just an agency. What Udell posts isn't proof of anything. It was simply going to the point that I have read and heard often that all claims have always been paid. Like you, I don't believe something simply because I read it. In this case, I have always believed it because I have never read anything that refuted it. I want to find something that refutes this or backs it up that is a credible source. My goal is to simply to know the truth. You are still just posting things and making assumptions.
Posted: Mon Nov 22, 2010 12:55 pm Post Subject:
As for the definition of "insolvent", since based upon your post, they could be considered "insolvent" while at the same time be able to pay their claims, it doesn't matter if I was wrong. It just means that they met the definition of "insolvent" under California law. They still had the assets to pay their current claims.
AIG is irrelevant. It was used by Udell simply because it caused concerned.
You are correct that there wasn't enough money to pay annuity claims, but that is because the annuity claims were an ongoing expense going forward. Past annuity claims were all paid. Past life insurance claims were paid. There wasn't going to be enough money to pay for future life claims. This problem was solved when Aurora life took over and the policies were transferred to them.
The Guaranty Associations give the companies and orderly way to handle insolvencies while helping with the public trust issues.
Since it is so easy to assume that there has to be cases of beneficiaries not being paid 100%, why can't we find any examples. This should be easy. It isn't.
Posted: Fri Nov 26, 2010 04:11 pm Post Subject:
I have to agree. No life insurance beneficiaries lost a penny.
Posted: Tue Nov 30, 2010 02:10 am Post Subject:
Max, any follow up? I still can't find anything indicating that there were life insurance death claims not paid with Executive Life. Everything that I read confirms what I thought... At the time that they were taken over, they could afford to pay current claims and all future claims were handled by Aurora Life. The Guaranty Associations as part of the arrangement have been making payments to Aurora Life and Aurora is paying all death claims at 100%.
None of what I'm writing is primary information, so it's pointless to link. It could still be wrong. However, in the absence of any information indicating that death claims weren't paid 100%, it's difficult to believe your claim.
Posted: Tue Nov 30, 2010 03:16 am Post Subject:
Sorry, haven't had a chance to call the CHLIGA yet -- my 86-year old mom was hospitalized with congestive heart failure, and I've had to spend some time following up on some of her Medicare Advantage questions (I think she's more concerned about how much her deductible is than what the doctors have to say). Give me another 24 hours, thanks!
Posted: Tue Nov 30, 2010 07:58 pm Post Subject:
Take your time. Nobody other than me and you and a couple of others will be reading this. Spend time with your mom. My prayers are with you and your family.
Posted: Tue Nov 30, 2010 08:44 pm Post Subject:
Thanks for the kind words. Still hospitalized, but doing a little better each day.
I just got off the phone with the CA L&H Guaranty Association. Here's how it works:
If an insurance company is LIQUIDATED, from the moment of the court order to liquidate the company, all CLAIMS at and after that point are PAID as they are presented to the Guaranty Association -- BUT NEVER MORE than established in the state's law.
California's Legislature changed the state's limits two months ago (effective September 27, 2010) to the following (found in CIC 1067.02(c)):
(c) The benefits for which the association may become liable for life insurance and annuity policies shall in no event exceed the lesser of the following:
(1) Eighty percent of the contractual obligations for each policy or contract as modified pursuant to subparagraph (C) of paragraph (2) of subdivision (b), for which the insurer is liable or would have been liable if it were not an impaired or insolvent insurer.
(2) (A) With respect to any one life, regardless of the number of policies or contracts:
(i) Three hundred thousand dollars ($300,000) in life insurance death benefits, but not more than one hundred thousand dollars ($100,000) in net cash surrender and net cash withdrawal values for life insurance.
(ii) Two hundred fifty thousand dollars ($250,000) in the present value of annuity benefits, including net cash surrender and net cash withdrawal values.
(B) With respect to each payee of a structured settlement annuity, or beneficiaries of the payee if deceased, two hundred fifty thousand dollars ($250,000) in present value annuity benefits, in the aggregate, including net cash surrender and net cash withdrawal
values.
(C) Notwithstanding subparagraphs (A) and (B), in no event shall the association be obligated to cover more than an aggregate of three hundred thousand dollars ($300,000) in benefits with respect to any one life under subparagraphs (A) and (B).
(D) Notwithstanding subparagraphs (A), (B), and (C), with respect to one owner of multiple nongroup policies of life insurance, whether the policy owner is an individual, firm, corporation, or other person, and whether the persons insured are officers, managers,
employees, or other persons, in no event shall the association be obligated to cover more than five million dollars ($5,000,000) in benefits, regardless of the number of policies and contracts held by the owner.
That's the state law that controls in California and, other than the 80% limitation, is now fairly consistent with those of most other states in this regard.
Having said that, when an insurance company is in liquidation, ACTIVE policies (those with no current death claims) are often sold to other insurance companies (more often than not) and continued as-is. If an insured under one of those policies dies, their death claim is paid according to the contract, just like any other policy, by the company that assumed the contract. And those with cash value are often assumed by the acquiring company with their full cash value. In the "sale" or transfer of the liability for the policy to the acquiring company, there may be no cash assets to transfer, in which case, the Guaranty Association will fund the cash value of the transferred policies up to the limits established by law. (And in California, that, too, is limited by the 80% factor. So those folks can lose, too)
This was the case with Executive Life, with liabilities EXCEEDING assets by some $10+ Billion, the Guaranty Associations funded the policies being transferred to Aurora up to the cash value limits set by law. MANY PEOPLE LOST MONEY in their new policies, and some policyholders OPTED OUT of that arrangement, hoping to get more by making a claim against the "estate" of the failed company. Those folks are still receiving a little money as new recoveries are being made against Credit Lyonnais and others involved in the fraud that was discovered after the fact. But they have not been made whole. And that includes those policyholders who subsequently opted out and died.
There have been hundreds of pages of Congressional testimony, legal filings, and court proceedings that attest to this fact, and I have already provided links to some of them in previous posts above. When they speak of being paid by the Guaranty Associations, it is exactly as I have previously explained, and which was again told to me by the CHLIGA spokeswoman minutes ago over the phone, as follows . . .
Policies that experience death claims after a company is CONSERVED but before it is LIQUIDATED are generally paid at 100% (they have primacy over death claims that occur after the liquidation order). Deaths and death claims that occur after the liquidation order and before any policies are sold or transferred are ONLY PAID UP TO THE LIMITS ALLOWED BY STATE LAW. The Guaranty Association is legally PROHIBITED from paying more than the amount set by state law.
Now, having said that, a policyholder or beneficiary who has not received the full value of their policy may also file a secondary claim against the ESTATE of the now deceased insurance company for the unpaid balance of their contractual obligation. As a "creditor" of the estate, they stand in line with all the other creditors and can only hope the liquidator recovers enough additional money to satisfy their claims. There is no guarantee of that, and without contacting the individual responsible for the liquidation of an individual insurance company, there may be no way to know who, if anyone, did or did not recover additional money following the liquidation.
So, I'm going to take one additional step -- which will probably take a couple of weeks, maybe longer to get a response -- and contact the CA Dept of Insurance's Conservation and Liquidation Office and see what additional information I can obtain. As soon as I get it, I will be sure to post it for all to see.
At this point, it's still kind of a stalemate. If no recovery is obtained through the liquidator beyond the Guaranty Association's payment, at least in California, all beneficiaries lose a minimum of 20% of the death benefit, and prior to 9/27/2010, they lost all in excess of $250,000 (today it's all in excess of $300,000). In other states, all above whatever the statutory limit is lost, unless additional recovery can be made from the estate of the insurance company. Have all policyholders/beneficiaries been made whole? I still don't believe that it is true. I'll let you know what else I find out.
And you can do the same thing in your state, too.
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