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Reply to Woodmen of the World = No State Guaranty Fund?     
Old 01-30-2011, 02:12 PM   #31
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LGilmore on Woodmen of the World = No State Guaranty Fund?
 
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Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Lar,

"yet would never write with a higher-rated fraternal"

How many frats use independent agents?

"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."

But even though it wasn't a cake walk, they were covered. Try filing any insurance claim, none are really cakewalks.
I did not say GAs were magic wands. I did say they were an extra layer of consumer protection.

And no, larry having studied insurance, I would not sell fraternal policies because I don't like the one way structure not present in other types of companies. Yes, some of those fraternals are dam good. I just don't care for the idea they can change my aquired policy values if they wish. Other carriers may reduce their dividend or projected interest rate, but they can't go back and take money away or put a lien on it(outside of a policy loan, I would have to take out).

We're fine Larry, but you didn't give a good example did you? Since you really didn't address how a GA is similar to am best?
Still waiting for that explanation.
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Old 01-30-2011, 03:09 PM   #32
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Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Geez, "L", I didn't say the GA was the same as a Best's rating. I have put forth my position as well as I know how. But neither did you answer my question about whether you have clients in one company for more coverage (500k) than your state covers.

And sure, we're still fine.

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Old 01-30-2011, 04:24 PM   #33
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Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Originally Posted by LGilmore View Post
And no, larry having studied insurance, I would not sell fraternal policies because I don't like the one way structure not present in other types of companies. Yes, some of those fraternals are dam good. I just don't care for the idea they can change my aquired policy values if they wish. Other carriers may reduce their dividend or projected interest rate, but they can't go back and take money away or put a lien on it(outside of a policy loan, I would have to take out).
Aren't fraternals allowed to impose a special assessment against members if reserves aren't sufficient to pay claims?
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Old 01-30-2011, 04:33 PM   #34
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They are. They refer to it as an "open contract".
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Old 01-30-2011, 04:47 PM   #35
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Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
"LGimore said: "...If I were to use a fraternal, I would have the client sign off that we went through the options and the client chose the option without a guarantee. memmories have a way of changing should a problem come along."

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."

Lar, maybe it's me, but it sure looks like you're drawing a comparison between the two.
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Old 01-30-2011, 04:47 PM   #36
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Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Originally Posted by Larry Tew View Post
They are. They refer to it as an "open contract".
Am I allowed to do a special assessment? Seems a rather lopsided contract to me. I can see why he'd want someone to sign off. Sure, odds are the fraternal will never get into trouble just as odds are most companies won't. But with a fraternal they get a bill. I'd say that is an omission not to mention that.
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Old 01-30-2011, 05:05 PM   #37
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Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Which would you prefer... a bill or a letter from your state's guaranty association notifying you that your insurance company has been placed in receivership? And I STILL ask the question not just to "L" but to anyone who has posted their opinion in this thread... what's the difference between writing a policy for 500k above your state's limits versus writing 500k with a company not covered? Unless an agent can say with a straight face that they limit coverage in a single company to their association limit, any comment about writing business with an uncovered company is deserving of a re-think.

Every agent has to answer that for themselves. This issue has challenged some of my default positions and has been worth the time spent reading and posting.
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Old 01-30-2011, 05:10 PM   #38
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Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Originally Posted by Larry Tew View Post
Which would you prefer... a bill or a letter from your state's guaranty association notifying you that your insurance company has been placed in receivership? And I STILL ask the question not just to "L" but to anyone who has posted their opinion in this thread... what's the difference between writing a policy for 500k above your state's limits versus writing 500k with a company not covered? Unless an agent can say with a straight face that they limit coverage in a single company to their association limit, any comment about writing business with an uncovered company is deserving of a re-think.

Every agent has to answer that for themselves. This issue has challenged some of my default positions and has been worth the time spent reading and posting.
Off-hand, probably the letter. Unless the company has defaulted, the death benefit and ability to annuitize is still there. I assume if I don't pay the bill at minimum I lose my policy? Also, depending on how the contract is written, they may be able to enforce the bill beyond just forfeiting my contract.

I haven't look far enough into how fraternals handle assessments to say with absolute certainty how it would play out.

As I understand it, policyholders with Shenandoah can still annuitize their contracts, and the death benefits on life and annuities still pay out in full, correct? So really all I lost is the ability to take loans or surrender cash value? A lot better than a bill if you ask me.
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Old 01-30-2011, 05:45 PM   #39
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Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
I don't know exactly how an assessment would work. I remember having a client that had a UL with Kentucky Central when they went down. Jeferson Pilot assumed the policy. They added a moratorium on surrenders and also added a whopper of an additional surrender charge on loans and withdrawals. The death claims were not affected. My guy came out ok, but if he had needed access to the cash value, he would have been screwed. Not to mention that the death benefit was 800k - which was 500k ABOVE the GA coverage. So here we are again with coverage above association limits even though the company was covered by the association.
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Old 01-30-2011, 06:07 PM   #40
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Woodmen of the World = No State Guaranty Fund? Re: Woodmen of the World = No State Guaranty Fund?
Originally Posted by Larry Tew View Post
I don't know exactly how an assessment would work. I remember having a client that had a UL with Kentucky Central when they went down. Jeferson Pilot assumed the policy. They added a moratorium on surrenders and also added a whopper of an additional surrender charge on loans and withdrawals. The death claims were not affected. My guy came out ok, but if he had needed access to the cash value, he would have been screwed. Not to mention that the death benefit was 800k - which was 500k ABOVE the GA coverage. So here we are again with coverage above association limits even though the company was covered by the association.
I don't use the GA as a selling point. Also, the limits are so low as to be meaningless. That isn't the point for me, it is the assessments.
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