Guaranty Associations - If My Insurance Company Fails

[Mark]

I get this question all the time. What will happen if the insurance company goes out of business to my policy.

http://www.tdi.state.tx.us/pubs/consumer/cb006.html <--- Here is a good answer.


This does not apply to every company or product out there.

Example some whole life products being sold today are not policies but certificates. There is a difference. The big difference is the "Guaranty Associations"


Shenadoah Life was a good example of this. The INS Dept step in and done a good job for the agents and the clients.

 

[jdeasy]

I get this question all the time. What will happen if the insurance company goes out of business to my policy.

http://www.tdi.state.tx.us/pubs/consumer/cb006.html <--- Here is a good answer.


This does not apply to every company or product out there.

Example some whole life products being sold today are not policies but certificates. There is a difference. The big difference is the "Guaranty Associations"


Shenadoah Life was a good example of this. The INS Dept step in and done a good job for the agents and the clients.

That's not what is going with Shenandoah. The state guarantee fund is not paying cliams nor agents. Also, you are not allowed to use the state guanty funds as part of your sales presentation.

 

[VolAgent]

That's not what is going with Shenandoah. The state guarantee fund is not paying cliams nor agents. Also, you are not allowed to use the state guanty funds as part of your sales presentation.

No Guarantee fund is going to pay agents, and I don't think Mark meant to imply it would.

His answer was in response to a hypothetical question from a prospect. Every state is different, but in Tennessee if the consumer asks about a government guarantee, you are allowed to mention the Guarantee fund. Also, I know several companies include a flyer about the guarantee fund in every policy on delivery.

 

[Norwayguy]

No Guarantee fund is going to pay agents, and I don't think Mark meant to imply it would.

His answer was in response to a hypothetical question from a prospect. Every state is different, but in Tennessee if the consumer asks about a government guarantee, you are allowed to mention the Guarantee fund. Also, I know several companies include a flyer about the guarantee fund in every policy on delivery.

Spot on VolAgent...I know in my state the DOI will come after you for using the Guarantee association in your presentation...Having said that they are hypocritical...They came out and blasted agents that had been selling UCT Med Supp product (Fraternal not covered by Guarantee Association) for failing to disclose this fact.

So from this my take on DOI...If something is beneficial to the client then you can't tell them unless asked. If the DOI thinks it isn't beneficial to the client then you must tell them but in a way that does not get them to not purchase the product in favor of one covered by the Guarantee Association because then they can claim you used the Guarantee Association to make the sale of the product that was covered....Circular logic

 

[jdeasy]

No Guarantee fund is going to pay agents, and I don't think Mark meant to imply it would.

His answer was in response to a hypothetical question from a prospect. Every state is different, but in Tennessee if the consumer asks about a government guarantee, you are allowed to mention the Guarantee fund. Also, I know several companies include a flyer about the guarantee fund in every policy on delivery.

This is what he said;



"Shenadoah Life was a good example of this. The INS Dept step in and done a good job for the agents and the clients. "

I will admit to not having a Mark decoder ring, but, that is somply not what is going on with Shenandoah.

 

[VolAgent]

This is what he said;



"Shenadoah Life was a good example of this. The INS Dept step in and done a good job for the agents and the clients. "

I will admit to not having a Mark decoder ring, but, that is somply not what is going on with Shenandoah.

Not getting sued because the state ensured the policy didn't lapse and the death benefit got paid is a good job in my book. Getting paid is just icing on the cake when a carrier goes under.

I recall Mark complaining a few years ago about not getting paid after Shenandoah went under, so that is why I read it the way I did.

 

[jdeasy]

Not getting sued because the state ensured the policy didn't lapse and the death benefit got paid is a good job in my book. Getting paid is just icing on the cake when a carrier goes under.

I recall Mark complaining a few years ago about not getting paid after Shenandoah went under, so that is why I read it the way I did.

The state has not stepped in with Shenandoah. Shanendoah is still paying the claims and still paying the agents. I have gotten a depost from Shenandoah every week since they have been in receivership.

They have not been taken over by the guanty fund. Yes, they have done a good job of keeping things afloat during this process, but, it's not because of the fund.

 

[VolAgent]

Didn't Virginia put Shenandoah into receivership? We're splitting hairs here. Mark's statement is that the state did well with Shenandoah by the agents and policyholders. Whether that is the DOI appointed exec or the Guaranty Fund, the state has protected interested parties.

 

[Crabcake Johnny]

The state has not stepped in with Shenandoah. Shanendoah is still paying the claims and still paying the agents. I have gotten a depost from Shenandoah every week since they have been in receivership.

They have not been taken over by the guanty fund. Yes, they have done a good job of keeping things afloat during this process, but, it's not because of the fund.

...so if someone wanted money out of their annuity then....

 

[Mark]

I was saying that Shenandoah/INS DEPT did a great job taking care of it's clients and their agents. They didn't have to take care of their agents like they did. Most of the agent were shocked that they still got paid.


I'm glad we have the reserves fund to help client's. One never knows what the future holds.

The link that I shared is from the Texas Dept of Insurance is approved for the public.

I get asked all the time what would happen to their policy if the company goes under. The link does a great job explaining it. http://www.tdi.state.tx.us/pubs/consumer/cb006.html

I don't sell insurance base on the reserve, but when a prospect or client ask you this question, you are allowed to tell them the truth.

I'd be afraid to buy insurance if there was no reserve out there.