Dividend announcements

[scagnt83]

As for the mutuality argument, I used to buy the same argument you are making. Prudential a fine mutual life insurance company de-mutualized about 23 years ago. All the whole life holders at that time received shares. Today those shares are worth 8 times IPO price. I dont see a strong argument for mutuality anymore. Especially after experiencing what Ohio National did. For smaller whole life policies, I prefer a mutual company over stock company still.( Old habits)

Pru diversified away from WL. So did Met. That is why they demutualized and took the money grab. Warning signs.

Ohio National had piss poor financials, was a tiny carrier, yet somehow illustrated better than the rest.... no red flags there at all for an agent to see.... lol.

(same with Penn Mutual present day. IUL & Term are the bulk of their life revenue. Life revenue is lower than Dividends paid. Shady financials. Current dividend is only applied to recent blocks of biz. Yet "nothing to see here folks"....)

Those stories are exactly why mutuality and strong financials matter. I see it the exact opposite you do. Those policy holders bought a promise and got screwed (especially ON clients). I blame their advisors for not being aware of the situation with the carrier they are selling.

Anyone who has sold Penn Mutual but not read their state DOI financial filings. Is doing their clients a world of disservice. You cant pay more in Dividends than you make in Revenue and stay profitable long term. ON was no different.

 

[scagnt83]

Prudential a fine mutual life insurance company de-mutualized about 23 years ago. All the whole life holders at that time received shares. Today those shares are worth 8 times IPO price.

There were huge lawsuits about the losses those Policy Holders took with the tiny amount of Shares they received in relation to the Dividend promised.

8x means nothing if there is no basis of comparison.

And when you include the basis for comparison..... those policy holders got screwed.

 

[scagnt83]

As for the mutuality argument, I used to buy the same argument you are making. Prudential a fine mutual life insurance company de-mutualized about 23 years ago. All the whole life holders at that time received shares. Today those shares are worth 8 times IPO price. I dont see a strong argument for mutuality anymore.

And what is the basis for comparison concerning products?

UL? IUL? VUL?

They all transfer risk onto the Policy Owner.

You are speaking as if there is an alternative that equally compares to what a Dividend paying WL does.

If you have been in the life industry since the early 2000s. You should be aware of the increased risk to the client, that comes with PRODUCTS produced by non-mutual carriers.

 

[DHK]

We're big fans of whole life insurance... but that doesn't mean it's always represented accurately. We discuss whole life insurance misrepresentation issues in this week's podcast.

 

[PrivClientSG]

Comparing dividends, dividend history, etc., and IPO/stock, performance, etc., is beyond a fallacious exercise. It's not comparing apples and oranges, but oranges and the planet earth. In addition, you are starting off with inaccurate information regarding dividend paying history -- consecutive, skipped years, etc.

 

[SamIam]

completely agree. I just recall some bizarre theory from IRS that Life dividends arent taxable because they were actually priced into the product design up front. I recall an example given of a carrier who offered both a non-participating policy & participating policy. the participating policy charged nearly double the non participating policy & thus was the excuse that a substantial portion of the dividend was actually the overcharged premium planned (invested for many years) & given back

I never liked that entire justification as we have all seen carriers lower or discontinue dividends all together

The answer is simply because the IRS views Life Insurance as a provision for Beneficiaries - not the policy owner. So, no taxes are assessed on the cash value gains within a life policy - unless the policy is surrendered - that is "cashed out" by the owner this is why the insurance companies lobbied to classify them as a "refund of unused premium".

 

[DWPCL]

Ohio National had piss poor financials, was a tiny carrier, yet somehow illustrated better than the rest.... no red flags there at all for an agent to see.... lol.

As someone who sold ohio national whole life I want to share the joys of a recent annual review. Male, standard NT, 19k annual premium in a 10 pay. Ran an in force ledger and the dividend in year 11 is............. 23 bucks.

 

[Allen Trent]

As someone who sold ohio national whole life I want to share the joys of a recent annual review. Male, standard NT, 19k annual premium in a 10 pay. Ran an in force ledger and the dividend in year 11 is............. 23 bucks.

Is he not insurable? How would the current cash value look in single pay no lapse UL or IUL. Just wondering if he could get more guaranteed death benefit now that cash performance design has been taken from him

 

[DHK]

As someone who sold ohio national whole life I want to share the joys of a recent annual review. Male, standard NT, 19k annual premium in a 10 pay. Ran an in force ledger and the dividend in year 11 is............. 23 bucks.

Yes, they are the first company in history to redefine their dividend treatment. In short, if you don't pay a premium, there is no 'excess premium' to refund to the policyholder.

This was the original illustration when I sold my mother her 10-pay policy. The date of the illustration was 11/02/2020:


This was the revised illustration as of Feb 1, 2022:


I'd have to assume that everyone who was still insurable has done a 1035 exchange to a new contract by now... which creates adverse selection for AuguStar.

 

[Allen Trent]

Yes, they are the first company in history to redefine their dividend treatment. In short, if you don't pay a premium, there is no 'excess premium' to refund to the policyholder.

This was the original illustration when I sold my mother her 10-pay policy. The date of the illustration was 11/02/2020:
View attachment 15853

This was the revised illustration as of Feb 1, 2022:
View attachment 15854

I'd have to assume that everyone who was still insurable has done a 1035 exchange to a new contract by now... which creates adverse selection for AuguStar.

That is not as bad as I thought it would look. After 15 years, around 30 k difference in DB & CV. That is only about 6% total different than projected, meaning it is projected to perform at about 94% of originally sold by aggressive salesman preying on unsuspecting senior citizens