5 Reasons Why You Should Get Affordable Life Insurance

Submitted by helpyouguys on Mon, 07/19/2010 - 15:49

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.

Posted: 20 Jul 2010 12:17 Post Subject:

once it has been sorted out then you can forget all about it, and get on with the business of life



You can get the affordable life insurance cover in under 10 minutes,



Just read any of the posts wondering who's getting the death benefit when someone dies and never changed the beneficiary . . . and you might begin to realize life insurance is not a get-it-and-forget-all-about-it product.

I'd like to know where someone can get life insurance in force in just 10 minutes. Care to provide an answer to that?

PLEASE!! Learn your craft before you harm someone with your misinformation.

Posted: 20 Jul 2010 02:40 Post Subject:

Well, there's two ways to read this person's forum name.

Perhaps it's help you guys like I'm going to help you guys.

Or maybe it's more like help! ...You Guys!

Posted: 20 Jul 2010 09:21 Post Subject: Life Insurance

The reality is that there can be a big gap between getting a term life insurance policy that you are only half-hearted about, and getting one that you are totally happy with. So, getting a term life insurance policy that you are totally happy with is a process.

Posted: 21 Jul 2010 03:32 Post Subject:

Never knew it was about making someone "happy."

Posted: 30 Jul 2010 02:34 Post Subject:

William . . .

If you are relying on the information in Reasons 3 and 4 above in the original post,

once it has been sorted out then you can forget all about it

and

you can get whole life insurance, term life insurance or many others



I have to warn you that no insurance policy is a "get it and forget about it" thing. Some policies require that you read your annual statement and understand it to know that you might have to start paying more money each month to keep it going or you will lose it and all the money you paid for it (Universal Life). Others require that you pay close attention to what is happening in your cash accumulation and reallocate your money accordingly, or your death benefit may continue to decrease (Variable Life). Even term insurance, which is probably the easiest to understand of all, is not a get it and forget it product.

We see posts here all the time about beneficiary problems. If nothing else, all life insurance policies require that the owner keep the beneficiary statement up to date. It is probably the single most forgotten aspect of life insurance.

Why? Because someone gave the client the impression that "All you have to do is get it, and then you can return to your happy life. Just pay your money every month and your family will be taken care of."

It's not always as simplistic as that.

Posted: 30 Aug 2010 05:05 Post Subject:

Thanks helpyouguys for your informative article.

Posted: 30 Aug 2010 03:02 Post Subject:

Caveat emptor when it comes to the advice from helpyouguys. Notice he/she has not posted anything new since then.

Posted: 01 Nov 2010 10:06 Post Subject: Choose affordable and right plan

Quality of cover When you choose a life insurance provider, it’s important to look at the quality of the plans on offer. Most life insurance plans are similar, however there can be differences. For example, one might have exclusions that other insurers don’t, or there might be provisions in the policy that make it simple for the insurer to cancel the cover should they wish to. So it’s vital to check plans side by side to make sure the life insurance policy you choose is quality and doesn’t have unfavorable features.

Financial Stability
Also vital is the financial stability of the life insurer. A way to check this is to compare the financial strength rating (for example the insurer’s Standard and Poors rating or AM Best rating). These will show you that the insurer has a certain level of stability – and also gives you a way to compare insurers against each-other.

Claims
Making sure that the insurer responds quickly and fairly if a claim is needed is another key consideration.

Posted: 04 Nov 2010 01:09 Post Subject:

Huh? What variance in exclusions are you referring to? I'd love to see some examples.

Cancelation? Really?

While financial stability is potentially important, it's well worth noting that the life insurance industry has been well known for it's long standing practice of burrying its dead. So while it's good to know my company is safe and secure, I can point to no examples where insolvency has left a beneficiary high and dry.

Posted: 04 Nov 2010 05:28 Post Subject:

I can point to no examples where insolvency has left a beneficiary high and dry.



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.

Posted: 05 Nov 2010 11:19 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: 08 Nov 2010 01:55 Post Subject:

Max, I wanted to bump this so that we could get a response from you.

Posted: 10 Nov 2010 05:35 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: 10 Nov 2010 06:22 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: 10 Nov 2010 06:29 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: 11 Nov 2010 05:22 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: 17 Nov 2010 10:27 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: 17 Nov 2010 10:38 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: 17 Nov 2010 04:53 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: 17 Nov 2010 06:48 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%.

Posted: 17 Nov 2010 07:12 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: 17 Nov 2010 07:24 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: 18 Nov 2010 03:23 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: 18 Nov 2010 06:02 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: 18 Nov 2010 10:35 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: 18 Nov 2010 10:44 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: 18 Nov 2010 11:20 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: 18 Nov 2010 04:33 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: 18 Nov 2010 10:00 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: 20 Nov 2010 01:03 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.

Posted: 20 Nov 2010 01:26 Post Subject:

Max, that's a great link with ilhiga.

As I read it, it makes me thing that all death claims were paid 100% with Excutive Life. The reason why I'm saying this is that all of the policies were transferred to Aurora Life. Why would Aurora Life do this? They are getting payments from the state Guaranty Associations. The Guaranty Associations didn't pay the policy holders. From a policy owner point of view, the policies stayed in force with a different carrier.

Again, I can be wrong, but I see nothing indicating that any Executive Life life insurance policy holder didn't have a death claim paid at 100%.

Posted: 20 Nov 2010 04:27 Post Subject:

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.



You miss one vital point. The insurance company would not be insolvent if they had the assets to cover their liabilities. When the statement is made that there are $6,000,000 in liabilities, it means that's what's left AFTER whatever assets were accounted for. The exposure of the guarantee association is the statutory limit of its liability. They will not cover the whole $6,000,000.

As I read it, it makes me thing that all death claims were paid 100% with Excutive Life. The reason why I'm saying this is that all of the policies were transferred to Aurora Life.



This is a misreading of the reality. Death claims in process, and death claims following the conservation of the insurance company BEFORE any active policies are sold to another insurance company do not become the liability of the new insurance company. Only the active policies do (ones that cover persons who are not dead yet).

There are plenty of people whose Executive Life death benefits were never paid at 100%. Some of them are still receiving money as the various guarantee associations all continue to contribute toward the eventual payment of claims as part of the plan that was worked out years ago.

I'm sorry this is such a hard thing for some to understand.

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.



You're entirely correct. The fact that the number of insurance company failures is far exceeded by the number of bank failures each year (in good times and in bad) is testimony to the strength and solid foundation upon which all insurance is built. There is far more regulatory oversight of the insurance industry than the banking industry.

But when things are deliberately hidden from the regulators through false financial statements, it can take longer to uncover the misdeeds, and by the time they are discovered, it may be too late to safely rescue the victims. That's why we have the guaranty associations. Not a perfect solution, but it prevents total disaster from striking at the worst possible moment -- death of an insured at the same time their insurance company dies.

Posted: 20 Nov 2010 05:46 Post Subject:

Max, have you noticed that you still haven't been able to point to an article or anything showing any information about a life insurance death claim not being able to be paid at 100%. I sure haven't been able to find anything.

You are forgetting that an insurance company will become insolvent BEFORE they aren't able to pay their death claims. They have other liabilities other than the death claims, but the claims take precedence. Also, they can be taken over because they no longer have enough in reserves.

That's fine that the new company isn't handling the death claims that took place from the period of time shortly before the company failed until they took over. The point here is that an insurance company is going to be taken over far before the point that they only have the assets to pay a few months of claims. It's hard to believe that Executive Life didn't have the money to pay this handful of claims.

Max, understand that this isn't me simply doubting your word. Rather, it is a failure on both of our parts to be able to point to anything concrete that shows that Executive Life's death benefits were paid or weren't paid at 100%.

I don't expect you to believe me that they were paid at 100% because I haven't found anything to back up my belief. Yet, you shouldn't be currently be believing that they weren't.

As best as I can tell, the Guaranty Associations did not pay any Executive Life policy holder death claims. They paid lots of money to Auroa Life, but I can't find any evidence of them paying anything direct to a beneficiary. Without the Guaranty Association making a direct payment, there isn't any reason to think that the claims weren't paid, unless we have evidence showing this.

Posted: 21 Nov 2010 06:40 Post Subject:

I'm about through trying to explain the reality of your fantasy. So I'm going to post links to articles about Executive Life that all indicate that due to the enormous discrepancy between assets and liabilities that claims were being handled by the Guaranty Associations according to their statutory limits. Which, for may people would mean receiving LESS THAN THE POLICY VALUE or DEATH BENEFIT FACE AMOUNT.

http://money.cnn.com/magazines/fortune/fortune_archive/1991/05/06/74977/index.htm

You do the reading, and let's see what happens. Take note of the plight of Charles R. Wallace of Chicago, who was not dead, but was receiving annuity benefits (analogous to a death claim) and stood to lose most of $13,000,000 of future annuity benefits. That he did not/won't has nothing to do with insurance companies or guarantee associations, as you will read.

http://www.gpo.gov/fdsys/pkg/CHRG-107hhrg83976/pdf/CHRG-107hhrg83976.pdf

This is the transcript of the Congressional Committee on Government Reform hearing on October 10, 2002, into the failure of Executive Life and its resulting effects on policyholders. It is 277 pages long. I don't expect you to read every page (most of it is pretty boring stuff, like much of what Congress does). But if you just read the opening remarks of the Chairman, Rep. Dan Burton (R-IN), on p. 2 (references are to the actual numbered pages -- you have to add 4 to the PDF page count to find the right place) you will see these four paragraphs:

Before 1991, Executive Life was one of the country’s largest insurers, with more than 300,000 policyholders and $10.5 billion in assets. Executive Life had most of its investments in high-risk,high-yield junk bonds. With the collapse of the junk bond market in the early 1990’s, Executive Life became insolvent.

Afraid of a run on the company by policyholders, the Insurance Commissioner seized Executive Life and put it up for auction. In late 1991, the Insurance Commissioner accepted a bid for Executive Life that would separate the insurance business from its portfolio of junk bonds. This separation left the insurance business without a strong asset base, forcing benefits to be severely reduced.

The Executive Life debacle resulted in losses to its policyholders. State insurance guarantee funds made up part of the losses, but coverage was capped. Of the 300,000 policyholders impacted by the sale, approximately 5,000 reside in my home State of Indiana. The taxpayers of Indiana have spent $26.8 million to cover the losses by the policyholders. There is also an estimated $10.3 million to be spent in Indiana in the future.

California has approximately 180,000 policyholders. In California the State guarantees annuities up to $100,000 and life insurance up to $300,000. Annuitants and recipients of structured settlements in excess of State guarantees suffered great economic losses, and these are the people who can least afford it.

(emphasis added)

The $300,000 in the last paragraph is really only $250,000, up to 80% of policy face, but the other amounts are the correct. When the Congressman said 'The Executive Life debacle resulted in losses to its policyholders." that included death claims right alongside the annuities. They don't get different treatment (other than the larger amount paid to life insurance death claim beneficiaries).

On p. 3, Chm. Burton added:

We have learned that these people did not need to suffer like this. We have learned that an affiliate of Executive Life, Executive Life of New York, went through similar problems. However, the policyholders of Executive Life of New York were made whole.

So how can there be such a dramatic difference in outcome for these two companies? Mr. James P. Corcoran, the former New York Insurance Commissioner, is here to explain how he accomplished this.



What Corcoran told the Committee, see p. 47, was that his early oversight of junk bond holdings and NY's decision to limit junk bond holdings to 20% (ELNY had gotten up to as much as 64%) prevented the huge losses experienced by ELIC). They didn't quite get there before the ELIC fiasco brought them down, but the exposure was low enough that MetLife agreed to acquire the assets, and the policies and other liabilities, and no one in NY lost anything. But that was only one state out of 50, plus DC, Puerto Rico, Guam, and the other territories.

On pp. 6-7 is an April, 2002 article from the Los Angeles Times that tells part of the bigger story leading to the Hearing.

If you cannot accept this as proof of the fact that death claims have on more than one occasion NOT BEEN PAID IN FULL, then there is no hope for you at all. Until you find one of the hundreds of ELIC beneficiaries who received less than 100% of their policy proceeds. There are plenty of annuitants (equivalent to life beneficiaries) who were forced to accept 30% or greater reductions in their annuity benefits -- most are still alive today. Why them and not life beneficiaries?

That's exactly the point at which your fantasy evaporates.

But, in case you are still not convinced, here are a few more earlier articles that tell some of the same tales. After reading them, you are free to persist in your fantasy. I just hope you never have to find out how wrong you are through actual experience.

These are all a dose of reality, whether you can grasp it or not.

http://articles.latimes.com/1991-05-17/news/mn-1874_1_executive-life

http://www.cato.org/pubs/regulation/regv15n2/reg15n2a.html

http://www.caclo.org/perl/index.pl?document_id=4c6951ac85550a083ba98ebf80668c27 (here, you can view at least 47 other documents about ELIC and its failure)

So, please give up! Surrender to the truth. When an insurance company is insolvent and the claims fall on the state Guaranty Associations, they are paid according to state law, and not necessarily according to the insurance contract.

Perhaps the part that is confusing you is the whole business of liquidating an insurance company. That is not done by the Guaranty Association. It is done by the Insurance Commissioner (in CA we have a Conservation and Liquidation Office within the Dept of Insurance to handle the matters).

Whatever they can collect on behalf of policyholders and claims is paid to the Guarantee Association (or in the case of the ELIC opt-out policyholders, to a special trust that is still reimbursing those folks, but they have never been "made whole", and are unlikely to ever be made whole) to cover statutory claims, and if it is not enough to do even that, as was the case with Executive Life, all other insurance companies have to kick in an extra assessment to help cover for their "deceased" brethren.

So at this point, I'm about done, too. I have roasted, toasted, and cooked this piece of meat way beyond well-done. You are now chewing on burnt cinders when you could have stopped at the tender truth when it was first reveled to you a long time ago.

Tell us, will the dream continue, or will you wake up and come to your senses?

Posted: 21 Nov 2010 09:46 Post Subject:

There are plenty of annuitants (equivalent to life beneficiaries) who were forced to accept 30% or greater reductions in their annuity benefits -- most are still alive today. Why them and not life beneficiaries?

That's exactly the point at which your fantasy evaporates.



Max, the answer is because we are in complete agreement when it comes to annuitants. I've never made the claim and have never heard the claim that all annuitants have always been paid at 100%. However, I have often heard this claim about life beneficiaries. I haven't dug through your information as of yet, but I don't need to be right. As I keep saying, I'd be happy to be proven wrong. I hope that there is information in this last post of yours that proves you right. Up to this point, there has only been your assertions.

Posted: 21 Nov 2010 02:52 Post Subject:

I've never made the claim and have never heard the claim that all annuitants have always been paid at 100%. However, I have often heard this claim about life beneficiaries. I haven't dug through your information as of yet, but I don't need to be right.



What a load of CRAP that statement is! "I don't have to know the facts to be able to make a boneheaded statement," is what you've just said. Well, that's true. But you ARE NOT RIGHT. But you won't put in the effort to find out.

I have often heard this claim about life beneficiaries.



And I've heard there's a pot of gold at the end of the rainbow, that Superman can be killed by Kryptonite, that Santa Claus lives at the North Pole, and the Tooth Fairy will give you money if you leave your tooth under your pillow when you go to sleep.

What anyone "hears" is BS compared to the reality of what people GOT. Or didn't get.

I heard the car salesman tell me the warranty covers EVERYTHING. Think that's 100% correct? I heard the lawyer say, "We're going to get you $1,000,000" and then accept a $51,000 settlement, of which they still took their $17,000 cut (true circumstance involving my now deceased father in 1977-1978).

OK, for the last time. Look at p.133 of the Congressional hearing document (you might want to start a few pages ahead of that for some more background about the "debts" of the Guarantee Associations (from their statutory payments to policyholders and beneficiaries), where you will see this record of testimony:

Mr. OSE. OK, California Life Insurance Guarantee Association.
Then there are other states that have participated.
Mr. GREEN. Right.
Mr. OSE. So they would each get a piece. So if you add all that up, what does it come to?
Mr. LEVINE. Do you mean what is the percentage?
Mr. OSE. No, what is the number we have got to get or recover in order to make everybody whole?
Mr. LEVINE. Oh, I don’t have that number, but it is astronomical. I think the loss for time value of money and everything else——
Mr. OSE. This is Washington; I mean the numbers—[Laughter]——
Mr. LEVINE. I don’t know the number. It is billions, ‘‘billions ’’ plural, I am certain.
Mr. OSE. $5 billion?
Mr. LEVINE. Oh, I couldn’t even speculate because I don’t know. I am not sure that anybody, first of all, has calculated the actual loss that each policyholder took, taking what they got versus what they would have gotten had Executive Life never gone under. I don’t think that number exists.
Mr. OSE. OK, so it is more than $1 billion because you said ‘‘billions.’’
Mr. LEVINE. I think it is more than $1 billion, yes.
Mr. OSE. Is it more than $2 billion?
Mr. LEVINE. I’m going to guess more than $2 billion, but, I mean, I——
Mr. OSE. Is it $10 billion?
Mr. LEVINE. I don’t even have a basis for speculating on how much it takes to make everybody whole. I would hope $10 billion would do it, but I don’t—I shouldn’t even say that because I just really don’t know.


Don't think for a minute this is ONLY a discussion of annuity policyholders or GIC holders. There were only about 5600 of them in California, compared to 160,000 life policyholders and some 330,000+ policyholders across the country. Some of those life polices were the subject of death claims -- how many? I cannot tell you, and you'd have to get the information from at least 49 different Guarantee Associations.

But other pages of the record of the hearing will show you that those life policies that went to Aurora . . . the people got new contracts with HIGHER premiums to account for the losses to cash value. So the whole concept of "being made whole" -- even the speculation of Rep. Ose about $10 Billion being enough -- it a feather in the wind.

Give it up! People lost money. Admit it. Death claim beneficiaries, annuitants, life policyholders. Almost EVERYONE connected contractually to Executive Life of California -- in all states other than New York (where there was the second company, ELNY, due to NY insurance law prohibiting most "foreign" or "alien" insurers from doing business there) -- LOST MONEY IN SOME AMOUNT, big or small.

Please, step into the real world. Stop listening to the still small voices and discover the truth.[/quote]

Posted: 21 Nov 2010 03:17 Post Subject:

Max,

You are so damn sure of yourself, yet you still haven't posted anything that has shown a single death benefit not being paid at 100%.

I've been putting in the effort and I have never been able to find anything that shows that death claims weren't paid at 100%.

On two points, you will get no arguments from me. 1)The Guaranty Associations have a limit as to how much they will pay each policy holder. 2)Lots of people lost lots of money with Executive Life.

That still doesn't answer the specific question as to whether any LIFE INSURANCE DEATH CLAIMS were paid out at less than 100%.

From what you quoted notice that the only loss that the specifically mention does not include life insurance:

California has approximately 180,000 policyholders. In California the State guarantees annuities up to $100,000 and life insurance up to $300,000. Annuitants and recipients of structured settlements in excess of State guarantees suffered great economic losses, and these are the people who can least afford it.

Posted: 21 Nov 2010 03:32 Post Subject:

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?

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.

Nobody has said anything about everyone being made whole. I have no doubt that people have lost cash surrender value.

I'm making one and only claim that I'd like to see refuted. "All death claims were paid 100%."

Please show us anything about a death claim not being paid 100%. Everything here is your assumption.

You're assuming that since Guaranty Associations were involved, big claims weren't paid.
You're assuming that they were insolvent.
You're assuming that since people lost money, death benefits weren't paid 100%.

The problem with this is that they weren't insolvent when they went under thus there was money to pay death claims, the Guaranty Associations weren't the ones paying future death claims and nowhere does it say that death benefits weren't paid at 100%.

One would think that if a death claim wasn't paid at 100%, somewhere there would be information that specifically says this.

Your information doesn't say this. I can't find information that says this. Again, I can be wrong, but the only information that I have saying that I'm wrong is your word on the subject. You may be right, but you still haven't been able to back it up.

I know that you are convinced, but don't you wonder why you have found specific things about GICs losing money and annuity holders losing money, but there is nothing other than conjecture about beneficiaries.

Posted: 21 Nov 2010 03:46 Post Subject:

Accuquote agrees with me. This doesn't mean that they are right, but without anything specific to the contrary...

"If you hold a life insurance policy from American General (an AIG subsidiary) and you’ve been paying attention to the news, it’s completely understandable as to why you might be feeling a bit anxious. Certainly the mortgage crisis has affected several large financial institutions and if you’re an American General life insurance policy holder, you are rightfully concerned.
As an AccuQuote customer and an American General life insurance policy holder, the choice is always yours to switch life insurance carriers. Our goal is to help you make an informed decision. With that said, I want to provide you with the following information, which I believe will help guide you in your decision making process:
• American General is a wholly owned subsidiary of AIG
• American General is strong, profitable and growing
• Insurance continues to be one of the largest sources of revenue for AIG.
• The insurance industry is highly regulated – So much that all life insurance companies doing business in the US must keep cash reserves for any/all life insurance they issue. These cash reserves are primarily invested in high quality investment grade fixed income securities which are extremely stable. This practice ensures the contractual obligation for the life insurance company to pay death benefits for term policies that are in force.
• If there is concern about the ability of ANY insurance company to pay claims, every State insurance commissioner has the authority to essentially merge the assets of any troubled insurer through a takeover by more solvent insurers. This method has been used successfully and repeatedly to prevent the default of even one payment of a death claim in over a hundred years in the United States and to make sure that every in-force policy is honored based on the original terms and conditions. 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
AccuQuote will in fact continue to sell American General as they are still rated A or better by A.M. Best. We believe they are in solid shape and will continue to be a leader in the term life market despite the difficulties their parent company is experiencing.
However, again, the choice is always yours. We do not push one company over another. Therefore, if you are concerned regarding an existing policy or one you recently applied for at American General, we would be more than happy to assist you in choosing an alternative company. Simply feel free to contact us at 800-442-9899 regarding any questions or concerns you may have."

Posted: 21 Nov 2010 03:48 Post Subject:

In case you missed it in my wall of text, the relevant portion stated:

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

Posted: 22 Nov 2010 03:19 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: 22 Nov 2010 03:52 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: 22 Nov 2010 12:37 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: 22 Nov 2010 12:44 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: 22 Nov 2010 12:55 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: 26 Nov 2010 04:11 Post Subject:

I have to agree. No life insurance beneficiaries lost a penny.

Posted: 30 Nov 2010 02:10 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: 30 Nov 2010 03:16 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: 30 Nov 2010 07:58 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: 30 Nov 2010 08:44 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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