Genworth Ratings and Stocks Going Down

[LFC]

Hello,

Please give me your opinion regarding Genworth. I have a client with a whole life policy that has quite a bit of equity. He is concerned that Genworth's ratings have gone down recently and their stock is plummeting.

He's wondering if he should take out all of his cash value. This is an 88 year old man and he is very concerned that Genworth is going to go bankrupt.

What is the tax consequence of taking out all of his cash value? I believe that only the interest will be taxed.

Have you heard anything through the grapevine regarding Genworth and their financial issues?

Thank you for your responses!

 

[DHK]

1) When banks go under, other banks will buy them up. The same thing would happen with Genworth, should it be necessary.

2) I doubt Genworth ever sold a WL policy. Probably a UL?

3) Does this 88 year old still need or want the insurance coverage? Where else would he get it if he cancels this policy? 88 is up there for getting new coverage.

4) It was discussed on another thread not to panic, not to twist policyholders into replacing their coverage, or to talk about state guarantee associations.

According to AM Best, they are rated B++ and a stable outlook as of 5 days ago:
A.M. Best's Consumer Insurance Information Center

This is a far cry from going bankrupt, but their financial standing was reduced.

 

[LFC]

Thank you for your response.

This happens to be my father. He purchased this policy at least 40 years ago. It wasn't originally purchased through Genworth. Genworth took over from the original carrier.

It is a single pay whole life policy. He put a lot of money into it upfront. The policy has about $500,000 of cash value now. Almost the same as the value of the life insurance policy itself.

He is asking me for advice. He's watching the market closely and worried that he may lose some of his case value. In your opinion, he should not be concerned? I'm thinking that also, but I sure don't want to give him wrong advice!

He is considering just cashing it out and putting the money into a CD to protect it. Although, he likes the 4% guaranteed interest he gets every year leaving it where it is.

 

[DHK]

Cash values of a WL policy are NOT tied to the stock value of the issuing company.

He and his policy will be just fine.

Just as Genworth took over from a prior company, worst case scenario, someone else would take over for Genworth and the policy would transfer to the new company.

 

[LFC]

Cash values of a WL policy are NOT tied to the stock value of the issuing company. He and his policy will be just fine. Just as Genworth took over from a prior company, worst case scenario, someone else would take over for Genworth and the policy would transfer to the new company.

Thank you, I will let him know your thoughts.

 

[BNTRS]

If the policy is 40 years old, there's a chance the maturity date is his age 90 so he may only have two years before Genworth sends him a check. That is a taxable event on gain, FYI.

 

[LFC]

If the policy is 40 years old, there's a chance the maturity date is his age 90 so he may only have two years before Genworth sends him a check. That is a taxable event on gain, FYI.

Yes, it is almost ready to endow. He took a loan out on it of around $200,000 and then paid it all back. He isn't sure what the gains would be because of the loan and payback. He used taxed dollars to pay back the loan.
Thank you for your response.

 

[BeeSelective]

Cash values of a WL policy are NOT tied to the stock value of the issuing company.

He and his policy will be just fine.

Just as Genworth took over from a prior company, worst case scenario, someone else would take over for Genworth and the policy would transfer to the new company.

Genworth was created from Life of Virginia in Richmond Va, and First Colony in Lynchburg, Va. Lynchburg services the life insurance and Richmond does Ltc and annuities....from memory....I might be wrong on this. Life of Virginia create "the challenger" which was one of the first ul products, interest rates were in the teens, 12-15% or so in the 80's, I believe.

 

[LFC]

Genworth was created from Life of Virginia in Richmond Va, and First Colony in Lynchburg, Va. Lynchburg services the life insurance and Richmond does Ltc and annuities....from memory....I might be wrong on this. Life of Virginia create "the challenger" which was one of the first ul products, interest rates were in the teens, 12-15% or so in the 80's, I believe.

Evidently this single premium whole life policy was and is great! Not sure that the product is even available anymore.