Woodmen of the World = No State Guaranty Fund?

[jacobtn]

It is my understanding that they are not insured, nor required to have reserves because they are a non-profit fraternal organization. Is this true? He has $50,000 in it. He is looking for something else as he is not happy with it.

Why would anyone sell annuities for a company that does not have the state guaranty fund as a backup for the client?

 

[Justin Bilyj]

How old has the association been up?

 

[Fisher]

Let me google that for you

 

[Newby]

Fraternals do not participate in state guarantee funds.

 

[Larry Tew]

In 31 years I've never had an issue involving the guaranty association. The association's existence is no substitute for placing clients in sound companies. The bigger fraternals (Modern Woodmen, Thrivent, Woodmen of the World, etc) run tight ships, are 125+ years old, and also have stronger fixed annuities than most non-fraternals. Never say never, but the likelihood of failure in any of the companies I mentioned is remote.

 

[Newby]

I would have to have a HUGE advantage to put a very large amount of money in an annuity with no state guarantee protection if a similar annuity was available WITH the protection elsewhere.
The same would be true of doing business with a bank that has no FDIC protection.
It is only one piece of the puzzle. But if all else is close to equal, I want the extra protection.

 

[Larry Tew]

I would have to have a HUGE advantage to put a very large amount of money in an annuity with no state guarantee protection if a similar annuity was available WITH the protection elsewhere.
The same would be true of doing business with a bank that has no FDIC protection.
It is only one piece of the puzzle. But if all else is close to equal, I want the extra protection.

Here is an actual example I worked on about a year ago. Prospect had $315k from a 401(k) to roll. He was looking at a strong fraternal guaranteeing 3% for the life of the contract, and he was looking at a strong non-fraternal guaranteeing 4.3% the first year and 2% through year 9 (his time frame). At the end of the 9 years, the fraternal account would grow to $411k, the non-fraternal grows to $385k. Both companies had an equal set of financial strength ratings. In summary:

The fraternal provided $26k more based on guarantee to guarantee. It would cost the client a little more than 8% of the original deposit to go non-fraternal. In essence, they would pay a premium of $26k for the state guaranty. They chose the fraternal based of their assessment of odds and consequences.

To me, this isn't one of those always / never issues. It depends on what matters most to your prospect. "This is what happens if you choose this, and this is what happens if you choose the other. Which option fits you better?"

 

[Newby]

I am a very conservative person. I like guarantees. If I were that client, I would not have taken the fraternal.
However, as long as he understands what he's doing...it's his choice.

 

[Larry Tew]

To put things in perspective, here in NC the guaranty association has been activated 45 times - ever. Only 7 times since 2000. It will matter to some, not to others.

 

[Norwayguy]

To put things in perspective, here in NC the guaranty association has been activated 45 times - ever. Only 7 times since 2000. It will matter to some, not to others.

A good point...also something to keep in mind is how much the Guarantee Association protects...in My state annuities are only protected up to 100K so per your previous case in my state to have that account protected by the guarantee association would have required 4 seperate carriers.