Dividend announcements

[PrivClientSG]

I recently resigned from a FAC with this carrier, and am still under a confidentiality/non-disclosure agreement. I will say it was not one of the major mutual companies, or as some call them, "the Big Four" or "the Final Four."

 

[scagnt83]

I recently resigned from a FAC with this carrier, and am still under a confidentiality/non-disclosure agreement. I will say it was not one of the major mutual companies, or as some call them, "the Big Four" or "the Final Four."

Understood

 

[DWPCL]

As many here well know, the dividend rate declared is meaningless -- 5.8%, 6%, 6.2%, etc.

More important, also as many here well know, some of the important factors and some of the important information that goes into the dividend calculation, is not immediately clear. The information can be extremely difficult to decipher, yet alone obtain.

We have seen carriers go from a "gross" dividend methodology to a "net" dividend. We have also seen various factors -- costs, charges, variables that will reduce the dividend, etc. -- included, that were not included before. One major carrier started "subtracting" (from their dividend calculation formula) an item of income, which now instead of increasing the dividend, reduced it. They turned an asset into a cost. When questioned, the carrier said it only impacted the dividend by approximately 10 basis points. IMO that is a very big number. On $1B of dividend dollars, that's $10 million that does not get paid into the policies of policyowners!

Its this kind of crap that makes me like VUL more and more.

 

[PrivClientSG]

Its this kind of crap that makes me like VUL more and more.

While I do not agree with any of those types of business practices, they are more the exception than the norm. With whole life insurance -- even with these occurrences -- you still have a product that is built upon a series of guarantees. This in and of itself shifts the risk to the insurance company. With a VUL product, you are shifting risk (back) to the insured.

If based upon your client, their specifics, their need, want, use, and everything else -- if you are OK with that risk, and you explain it fully and completely to your client -- then go for it, use VUL.

 

[Sheryl J Moore]

NY Life has declared a 20 basis point increase.
For some reason the file of the announcement will not attach.
If you want the announcement (nothing groundbreaking)
www.newyorklife.com

Do you know what NYL's rate was for last year? sjm

 

[Allen Trent]

Do you know what NYL's rate was for last year? sjm

Looks like 6%

 

[walthamny]

The only thing a dividend announcement tells me is that most likely the insurance company has a positive cash flow. If things were so horrible they would look for a way not to pay any dividends

 

[Allen Trent]

The only thing a dividend announcement tells me is that most likely the insurance company has a positive cash flow. If things were so horrible they would look for a way not to pay any dividends

That doesn't sound near as catchy as these carrier bulletins. Maybe rewrite your statement with a little more marketing & positivity

 

[PrivClientSG]

The only thing a dividend announcement tells me is that most likely the insurance company has a positive cash flow. If things were so horrible they would look for a way not to pay any dividends

No offense, but that's BS. Most likely? The foundation of a mutual insurer is to pay dividends. Insurance companies have had plenty of opportunities to not pay dividends. The "Big Four" have paid dividends for well over 150 years -- through world wars, civil war, the Great Depression, stock market crashes, inflation, stagflation, good, bad, and so on. Obviously they are not non-profits, but they are mutual companies. That means something. The stock companies say it doesn't, but they have to say that. Take out the dividend, make it zero, and with a mutual company, you still have a company that returns capital to policyowners.

 

[DHK]

Dividends are declared by the board of directors... and if they're a smart board, they'll always declare SOMETHING. The last thing a mutual company wants, is the reputation that they skipped paying a dividend to their policyholders. It would demoralize their agent sales force.

Even Ohio National, with their massive losses on their books at the time, paid dividends to their participating policy holders. (Which was, in hindsight, a great way to mask the truth of the true financial status of the company.)