Over 150.000 insurance professionals and consumers come to the Insurance Forum every month. Click here to register for FREE


Go Back   Insurance Forums > Insurance Agents and Brokers Forum > Annuities Forum

Reply to Woodmen of the World = No State Guaranty Fund?     
Old 01-29-2011, 12:47 PM   #21
Guru
 
Join Date: Jan 2007
Posts:1,932
State: retread is an Insurance Agent from Kansas
retread is a member of 1000 posts VIP club
Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Originally Posted by djs View Post
Yes there would be. They would only get 80% of the $250K cash in their life policy, so there would be $50K left to cover annuities.

To be honest though, the chances of multiple companies going belly up at the same time is pretty slim. Because of this, you may have time to rethink your strategy if one did default.

Dan
Yeah, agree on multiple companies with the same client, but this brings to my attention the danger of multiple products from ONE company. Perhaps it is not good to sell an annuity from the same company one has contracted a Life policy!

------------------------------------
Some guys were talking on the subject of boxers vs. briefs. I noticed that those who were wild and footloose liked boxers and those who were more uptight liked briefs. When they asked me, "Which do you like, boxers or briefs?" I said... "Depends."
  Reply With Quote to Woodmen of the World = No State Guaranty Fund?

Old 01-29-2011, 12:49 PM   #22
djs
Guru
 
Join Date: Mar 2007
Posts:6,593
State: djs is an Insurance Agent from California
djs is a member of 5000 posts Super VIP club
Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
It would depend on the values. If its a high enough value, I think the client would see the wisdom of your words.

Dan
------------------------------------
  Reply With Quote to Woodmen of the World = No State Guaranty Fund?
Old 01-29-2011, 12:53 PM   #23
Guru
 
Join Date: Jan 2007
Posts:1,932
State: retread is an Insurance Agent from Kansas
retread is a member of 1000 posts VIP club
Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Originally Posted by djs View Post
It would depend on the values. If its a high enough value, I think the client would see the wisdom of your words.

Dan
I suppose there is little difference in the long run.... the aggregated funds clause would only be significant for small FV policies... However, this is my market.

------------------------------------
Some guys were talking on the subject of boxers vs. briefs. I noticed that those who were wild and footloose liked boxers and those who were more uptight liked briefs. When they asked me, "Which do you like, boxers or briefs?" I said... "Depends."
  Reply With Quote to Woodmen of the World = No State Guaranty Fund?
Old 01-29-2011, 01:40 PM   #24
Guru
Norwayguy on Woodmen of the World = No State Guaranty Fund?
 
Join Date: May 2008
Posts:8,764
State: Norwayguy is an Insurance Agent from Maine
Norwayguy is a member of 5000 posts Super VIP club
Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Originally Posted by djs View Post
California is a bit worse:
Did I read that correctly in CA if client has $100K in an annuity with ABC company and they fold they are only protected by 80% of the policy value up to a max of 100K so in my example the protection runs out at $80K? So if I read it right account size doesn't matter even small policies would take a loss of 20%?

Dang sounds like a good reason to drive to the next state to sign the policy...would that work, If the policy was written in say Maine would the CA resident be covered by Maines guarantee fund or CAs?
------------------------------------
  Reply With Quote to Woodmen of the World = No State Guaranty Fund?
Old 01-29-2011, 03:00 PM   #25
Guru
 
Join Date: Jan 2007
Posts:1,932
State: retread is an Insurance Agent from Kansas
retread is a member of 1000 posts VIP club
Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Originally Posted by Norwayguy View Post
Did I read that correctly in CA if client has $100K in an annuity with ABC company and they fold they are only protected by 80% of the policy value up to a max of 100K so in my example the protection runs out at $80K? So if I read it right account size doesn't matter even small policies would take a loss of 20%?

Dang sounds like a good reason to drive to the next state to sign the policy...would that work, If the policy was written in say Maine would the CA resident be covered by Maines guarantee fund or CAs?
For KS:


However, not all individuals with a right to recover under life or health insurance policies are protected by the act. An individual is only provided protection when:

1. the individual, regardless of where they reside, except for nonresident certificate holders under group policies or contracts, is the beneficiary, assignee or payee of a covered policy or contractholder,
2. the individual policy or contractholder is a resident of the state of Kansas,
3. the individual is not a resident of the state of Kansas,but only with respect to an annuity contract which has been awarded pursuant to a judgement or settlement agreement in a medical malpractice liability action,
4. the individual is not a resident of the state of Kansas, but only under all of the following conditions:
a. the impaired or insolvent insurer was a Kansas domesticinsurer; and
b. the insurer never had a license to do business in the state in which the individual resides; and
c. the state in which the individual resides has an association similar to this state’s; and
d. the individual is not eligible for coverage by the association of the state in which the individual resides.


------------------------------------
Some guys were talking on the subject of boxers vs. briefs. I noticed that those who were wild and footloose liked boxers and those who were more uptight liked briefs. When they asked me, "Which do you like, boxers or briefs?" I said... "Depends."
  Reply With Quote to Woodmen of the World = No State Guaranty Fund?
Old 01-29-2011, 04:08 PM   #26
Guru
LGilmore on Woodmen of the World = No State Guaranty Fund?
 
Join Date: Jun 2007
Posts:3,998
State: LGilmore is an Insurance Agent from Washington
LGilmore is a member of 1000 posts VIP club
Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
"If you placed someone with an "A" or "A+" company, would you ask them to sign off on the fact that there are "A++" companies that might be stronger? Even though the "A" company falls under the guaranty plan, it is an unpleasant experience and no guarantee that the client will be made whole."

Actually Larry, since I am independent, I do go through ratings and financials with clients. And since it has been beat into my head because of securities, I do note and have the client sign off on a buttload of things.

But actually your question really doesn't compare to who is and who isn't part of the guarantee association. the guarantee association isn't about who is strong or stronger, it is about an extra layer of consumer protection in the case of trouble. It has ABSOLUTELY nothing to do with best ratings. thanks.
------------------------------------
  Reply With Quote to Woodmen of the World = No State Guaranty Fund?
Old 01-29-2011, 05:29 PM   #27
Super Genius
mynarky on Woodmen of the World = No State Guaranty Fund?
 
Join Date: Jan 2011
Posts:107
State: mynarky is an Insurance Agent from Illinois
Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Guaranty association or not, another insurance company would likely just buy up the contracts, at least thats how I understand life insurance companies disolving usually happens
------------------------------------
  Reply With Quote to Woodmen of the World = No State Guaranty Fund?
Old 01-29-2011, 05:38 PM   #28
Guru
Larry Tew on Woodmen of the World = No State Guaranty Fund?
 
Join Date: Jul 2010
Posts:2,448
State: Larry Tew is an Insurance Agent from North Carolina
Larry Tew is a member of 1000 posts VIP club
Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Originally Posted by LGilmore View Post
...But actually your question really doesn't compare to who is and who isn't part of the guarantee association. the guarantee association isn't about who is strong or stronger, it is about an extra layer of consumer protection in the case of trouble. It has ABSOLUTELY nothing to do with best ratings. thanks.
It seems we have a difference of opinion.
------------------------------------
  Reply With Quote to Woodmen of the World = No State Guaranty Fund?
Old 01-29-2011, 08:26 PM   #29
Guru
LGilmore on Woodmen of the World = No State Guaranty Fund?
 
Join Date: Jun 2007
Posts:3,998
State: LGilmore is an Insurance Agent from Washington
LGilmore is a member of 1000 posts VIP club
Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
"It seems we have a difference of opinion."

Larry, you're using companies with different financial ratings, which can move up or down to compare with the state guarantee association. It's not a good comparison.

You either belong to the guarantee assoc or not. the level of guarantee doesn't move up or down depending on the strength of the company. It is there for the customer, not the company. A company can have a best rating that moves up or down in the market. The best rating cannot fullfil an obligation to a customer can it?

So we can disagree, but that doesn't mean your comparsion is correct. Please think about it or simply explain how being part of a guarantee association is the same as a best rating.

To me, one has the ability to pay, the other doesn't. How do you see it that they are the same?
------------------------------------
  Reply With Quote to Woodmen of the World = No State Guaranty Fund?
Old 01-30-2011, 08:42 AM   #30
Guru
Larry Tew on Woodmen of the World = No State Guaranty Fund?
 
Join Date: Jul 2010
Posts:2,448
State: Larry Tew is an Insurance Agent from North Carolina
Larry Tew is a member of 1000 posts VIP club
Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Originally Posted by LGilmore View Post
"It seems we have a difference of opinion."

Larry, you're using companies with different financial ratings, which can move up or down to compare with the state guarantee association. It's not a good comparison.

You either belong to the guarantee assoc or not. the level of guarantee doesn't move up or down depending on the strength of the company. It is there for the customer, not the company. A company can have a best rating that moves up or down in the market. The best rating cannot fullfil an obligation to a customer can it?

So we can disagree, but that doesn't mean your comparsion is correct. Please think about it or simply explain how being part of a guarantee association is the same as a best rating.

To me, one has the ability to pay, the other doesn't. How do you see it that they are the same?
Your first comment in this thread was "I guess as long your E&O is paid up..... " The thread (to me) is about being responsible in your recommendations to your clients. Your comment suggests that any agent recommending a fraternal is guilty of either an error and / or an omission. I disagree with that point of view. Does your E&O prohibit you from using a fraternal? Mine doesn't.

Policy holders of Baldwin United, Executive Life, and Kentucky Central were covered under the Guaranty Association, but it was anything but a cake walk for them. The existence of the Guaranty Association is not a magic wand that heals all wounds.

You said that if you ever used a fraternal, you would have the client sign a waiver acknowledging the use of a fraternal. You did not agree with my point where I asked you if you would also get a waiver letting the client know there may be stronger companies than the one you placed them in. You disagreed with my thought process on that. Since the whole issue is about safety for the client, I still think it is a fair question.

Finally, if Guaranty association coverage is critical, here's a thought. In Washington, your Gauranty association has activated 36 times since 1971 - less than one time per year on average. Cash values and death benefits are covered up to 500k. While you wouldn't want to put a client's coverage in a position that would not have association coverage (i.e. a fraternal), do you limit your client's coverage to 500k in any one company? If you have a client with $1,000,000 face amount in one company, do you disclose to the client that 500k of his death benefit isn't covered by the association?

Even though life insurance company failures are rare, I'm not discounting the value of the guaranty association. I'm trying to see it in it's proper perspective. I still believe that the financial strength of a company is far more important than their association coverage status. Best's assigns letter ratings to approximately 550 companies. 22 are rated A++, and 105 are rated A+. There are agents that have no reservations about writing business with lesser rated companies, yet would never write with a higher-rated fraternal. I don't share that view. And, it would be interesting to know how many agents think association coverage is critical yet have their clients covered by one company for more than their association covers.

I hope this clarifies my position and that we can respect each other's preferences.

------------------------------------
larrytew.com

Last edited by Larry Tew; 01-30-2011 at 10:44 AM. Reason: grammar
  Reply With Quote to Woodmen of the World = No State Guaranty Fund?
Reply to Woodmen of the World = No State Guaranty Fund? 

  Insurance Agent Forum > Insurance Forums > Insurance Agents and Brokers Forum > Annuities Forum




Similar Threads with Woodmen of the World = No State Guaranty Fund?
Thread Thread Starter Forum Replies Last Post
Some State Farm Question squeed Getting Started Selling Insurance 11 07-17-2012 03:46 PM
Why I think FINRA is behind it URDRWHO Annuities Forum 82 05-16-2011 08:12 PM
The Cost of State Health Insurance Mandates Sam Employee Benefits Forum 11 02-12-2010 05:02 PM
Assured Life/ Woodmen of the World sluggo08 Senior Insurance Forum 13 01-21-2010 01:33 PM
Fraternal Benefit Societies V/s Insurance Companies Mark General Insurance Agent Discussions 9 12-01-2009 11:06 AM



All times are GMT -5. The time now is 12:16 AM.

Forum enabled with vBulletin®
Copyright ©2000 - 2017, vBulletin Solutions, Inc.


Join the Forum - It's FREE

Share This Page



Weekly Poll

Where do we go from here? POLL
Nothing - No ACA fixes - status quo
29.82 %
HHS Rulings and band aid bills
17.54 %
Hail Mary repeal and/or replace bill
17.54 %
A bipartisan bill to fix ACA
35.09 %

Voters: 57. This poll is closed