An Old and a New Problem - AM Best

[Tahoe Ray]

I know some carriers are looking at ways they could force those maturities & not extend because they hate paying some of the high guarantee rates of 3 or 4% or more

They don't even need to force it. They can just enforce the contract/policy language. Of course, those policies get replaced but no one cares. The carrier with the high guaranteed rates gets it off of their books (since the client never seems to want to annuitize, even after discussing the advantages) and the accepting carrier gets a new premium.

Only the agent gets hosed having to fill out hours worth of paperwork to make 50bps on an MYGA for an 84yo...lol.

 

[Newby]

If a person has lived to be 100 and is in relatively good health, what a wonderful problem to have. The industry saw this problem several years ago and backed regulation for policies to be allowed to mature at age 121 in response.

No Rouse. Living to 100 is no fun if you have to pay taxes on the GAINS on your life insurance. Wow! Even having gains on your life insurance sounds pretty good. I'll pay my fair share if I live that long.
My dad bought a $500 WL policy on me when I was a baby. I knew I should have kept it going.

 

[WMSG]

They don't even need to force it. They can just enforce the contract/policy language. Of course, those policies get replaced but no one cares. The carrier with the high guaranteed rates gets it off of their books (since the client never seems to want to annuitize, even after discussing the advantages) and the accepting carrier gets a new premium.

Only the agent gets hosed having to fill out hours worth of paperwork to make 50bps on an MYGA for an 84yo...lol.

Absolutely. In every single case where I was asked to provide expertise, support, etc., that was always the insurance company's first -- and often only -- defense. Very often, it is the only one needed. I've seen many cases not get out of the starting gate, and many others dismissed, on an estoppel. In almost every litigation, so many cases I have read, an estoppel is almost always one of the life insurance company's first positions taken as it relates to their actions, obligations, etc. The life insurance policy -- the contract itself -- usually leaves very little subject to interpretation, as it relates to actions, obligations, etc. Outside of the contract, both sides will argue until they are blue in the face, LOL.

 

[scagnt83]

Absolutely. In every single case where I was asked to provide expertise, support, etc., that was always the insurance company's first -- and often only -- defense. Very often, it is the only one needed. I've seen many cases not get out of the starting gate, and many others dismissed, on an estoppel. In almost every litigation, so many cases I have read, an estoppel is almost always one of the life insurance company's first positions taken as it relates to their actions, obligations, etc. The life insurance policy -- the contract itself -- usually leaves very little subject to interpretation, as it relates to actions, obligations, etc. Outside of the contract, both sides will argue until they are blue in the face, LOL.

Exactly. Once you sign a legal contract, 99% of the time you are locked in and there is no real recourse outside the terms you agreed to.

That is why its so important to read what you sign. Easier said than done sometimes considering the stacks of pages one must read through. But imo, the more paperwork, the more reason to read it all. A 1000 page contract scares the sh*t out of me compared to a 10 page contract, but I digress.

Many "misunderstandings" on annuity/life policies Ive consulted on would have been eliminated had the client taken 30min-1h to just fully read the illustration and app. Especially policies sold within the past 10-20 years.

Often questions are not asked, answers not fully understood, or answers were not fully correct.

It doesnt matter what the agent or CSR says, what you sign is whats going to happen.

 

[Newby]

I know that people who buy term policies often think that after their 20-year term is over their payment ends and they THINK they have a paid up policy at that point. That’s a common misconception. But I would never expect an insurance company to do that for them.
I know many people that bought UL policies often think they work just like whole-life policies and are guaranteed as long as they live and are shocked when they crash not only at age 100 but often much younger. But I would never expect an insurance company to say Hey we’re sorry it went that way. We will pay you money that we don’t even owe you.
So the only people I can sympathize with in that article are the ones who had a gain and lived to the endowment age so they have to pay taxes on the gain. OK they didn’t expect that. But it’s only on the gain! So most people are still going to be thrilled.