Life Insurance and taxes

[NHB_MMA]

Re: P&C and Life Insurance Co's

My point is, yes, I would buy my life insurance from a company that probably doesn't do P&C but so much here is rhetoric and bias from the marketing depts of mutual co's in particular. this whole issue drives me nuts because my personal feeling if not for sarbanes oxley these mutual companies who scare the sh*t out people saying they're the only ones who pay claims would go public in a heartbeat. I know, I know, the policy holders would have to vote - so the company goes public and the policy holders are offered a huge bump of cash or stock into the policies and they'll say no?

I've never heard it from my mutual company. They're not in the habit of bashing the competition, from what I've seen. It's more a personal philosophy of mine and, again, it relates mostly to small, lesser known companies. State Farm is about as financially strong company as you can get, one of only about a half-dozen or so companies to get the A++ from Weiss.

I'm not saying stock companies are garbage, but I prefer a mutual company for permanent life products. It was mentioned sometime back that both a stock company and mutual company have pros and cons and I asked what is the advantage to the policyholder of a stock company over a mutual company and got nothing in response.

 

[L5tc]

NY Life's Favorite Line

It's probably from my buddies who joined NY Life. They will beat that "never missed a claim" line to death. And they HEAVILY imply that non-mutual companies or low rated companies have actually not paid claims. They can't say these companies DID miss claims because the state insurance boards have gotten all the claims paid. They also send around a list of companies that have merged as if THAT means you're claim won't be paid.

I suppose because they're captive agents the scare tactics are the way to keep people from shopping around, first call close and all that.

Yes I agree there's definitely a different feel to dealing with Mutual company than a public one and I certainly understand people who like buying CV from mutual companies.

 

[NHB_MMA]

Re: NY Life's Favorite Line

It's probably from my buddies who joined NY Life. They will beat that "never missed a claim" line to death. And they HEAVILY imply that non-mutual companies or low rated companies have actually not paid claims. They can't say these companies DID miss claims because the state insurance boards have gotten all the claims paid. They also send around a list of companies that have merged as if THAT means you're claim won't be paid.

I can't really speak to what others have done in their sales tactics. I have seen agents that I think are incredible people to deal with, and I have seen some that some a little more shady and commission motivated.

It is probably technically factual to use some examples of claims that would have been paid under a NYL policy that were not paid under others, but it is not a sales tactic I would endorse. For example, NYL has no wartime exlusion in their life policies. That is almost unheard of in the industry. I remember my exam study manual talking about the wartime exclusion as if it were universal on all policies. NYL will not issue more than 100K to a person actively serving in the military. Yet, if a person bought a $1M NYL policy for their child who ended up serving in the military later on, it is my understanding the full death benefit will be paid for any combat death.

As far as the "never missed a claim" line, I don't believe I've heard it preached. Actually, during the Civil War, NYL paid death claims on Confederate soldiers voluntarily. They did not have to do it, because their deaths resulted as an act of rebellion or treason, but the board voted to do it anyway. There is nothing wrong with talking of such things to show that an agent represents a company with a good history of business ethics, because it's pretty much demonstrably true. Of course, it is unethical to imply that if a person buys a policy from XYZ company that they're rolling the dice on whether or not they'll ever be paid. I can't comment to the specifics of the sales pitch you were talking about without knowing the exact details, but I've never heard of showing what companies have merged or anything like that.

I suppose because they're captive agents the scare tactics are the way to keep people from shopping around, first call close and all that.

NYL does not teach a first call close at all.

As for shopping around, it depends on how you feel about it. For starters, most people that say "we'd like to shop around" will NEVER end up doing business with you. The price of what your offering is 110% irrelevent, because it's just a natural reaction to making a reluctant buying decision. If you don't push for the close, you'll be out of business soon and the truth is in the long-term picture you're doing a disservice to your prospects because too many will end up buying a policy they don't understand, an incorrect DB, not buying anything before a claim arises, etc.

There are pros and cons to doing business with both a captive and an independent agent. Anyone that isn't intellectually honest enough to admit that is frankly a pretty poor agent.

Yes I agree there's definitely a different feel to dealing with Mutual company than a public one and I certainly understand people who like buying CV from mutual companies.

To me, it's just an added layer of peace of mind with the voting rights and ownerships aspect. It doesn't guarantee anything, nor does it mean a product from a stock company is junk. It's just something I believe in and state why I do, but nothing I distort or exaggerate.

 

[Guest]

War time exclusion? what the heck is that?

It is probably technically factual to use some examples of claims that would have been paid under a NYL policy that were not paid under others, but it is not a sales tactic I would endorse. For example, NYL has no wartime exlusion in their life policies. That is almost unheard of in the industry.

I. What exactly constitutes the war time exclusion.

1. Does this refer to being an active combatant. Specifically, serving in the armed forces of the U.S.
2. How about if one is the victim of an act of war. For Example, some muslim terrorist does a September 11 deed on our country once again. Would the victims life insurance pay the claim?


II. Waiver of Premium For Dissability.

I just read my life insurance policy. Found out that if dissabled because of an act of war, declared or undeclared, one is not covered. It does not matter if one is a combatant (in the armed forces of the U.S.) or a non-combatant (a civilian, a victim).

Kind of ticks me off. My Agent told me that the rider would pay if one were ever dissabled for any reason. Actually he said if one could not work for any reason. That is the problem, by the time you learn enough to know the right questions to ask, it is too late. Here is the SF web site on the subject - - https://online.statefarm.com/apps/G...te=IL&country=USA&bid=WAIVER_OF_PREMIUM_DSBLY

III. My Policies Provisions.

I read my policy cover to cover. There is no mention about not paying off if death was caused by war. Would the policy have to specifically state it if were to be an exclusion? The only provision where they will not pay is for suicide, whether sane or insane within two years of purchasing the policy.

Thanks.

 

[Steve]

Think about 9-11.

Most Life policies (if not all) state exclusions for acts of war / acts of terrorism.

I have not looked into exact figures, but my understanding is that everyone died and covered in the NYC tragedy was paid out.

Exclusions can be an out for the insurance companies, but sometimes, the "right thing to do" overrides the immediate financial interest of the business.

If a company had refused to pay upon the exclusions, the bad publicity would have put them out of business.

(Again, I'm writing on understanding, but not with numbers in front of me. If anyone can refute this factually, jump on in!)

 

[L5tc]

First Call Close

Correct - they don't teach the "first call close" during training, they have the idealized Financial Needs Analysis but as Petrowski mentioned if you aren't pushing for quick closes you'll be taking that "walk of shame" pretty quickly. There's a monumental disconnect between training and the true day to day selling style of the agency.

The training to say "never missed a claim" to clients certainly does imply that someone didn't pay a claim. Confederate soldiers getting paid? - I don't think I have a client who's going to buy a policy based on that piece of information. But that would be a great sales call, a NYL agent could open their laptop with it playing "Dixie" so set the mood for the sale.

 

[somarco]

if a big P&C liability hits one of these P&C co's that the reserve for paying life policies is in fact in jeopordy and a life claim might not be paid? And that there's no reinsurance co involved, does anyone know which co uses re and who doesn't?

Carriers, multi-line and otherwise, reserve by line of coverage. Some lines, such as health insurance, have smaller reservese due to the short tail. Others, such as WC and life, have larger reserves due to the long tail.

Just because a multi-line carrier takes a big hit on the P&C side (think Katrina, or WTC) doesn't mean their other lines are compromised. They are prohibited from borrowing from, or shifting monies from another line (such as life) to pay P&C claims. Those claims are paid out of operating capital, reinsurance, and if needed reserves for that line of coverage.

All carriers reinsure at least a portion of their claims. Even giants like Pru, AIG & Met will reinsure claims xs of a certain amount.

I haven't looked in an A M Best manual in a while, but they used to (and probably still do) show the net retention on life insurance policyholders.

 

[Guest]

1. If one is doing research, and one knew that NYL historically has paid out claims, even to the enemy (okay, I am being dramatic for the purpose of conveying my sentiments, the enemy being hostile forces engaged in arms against Union Troops), one would certainly have to put them on one's "short list."

2. When I did my research, I noticed many policies stated they were not being offered in NY. I wonder if the state has more rigid standards.

3. On a side note. Imagine being a LI agent around 1860. My goodness, what would prospecting entail. Getting on a horse and going from town to town. How would the company get its premiums. The banking system and mail sure as heck was not what it is today. I am joking around with you producers, good natured fun, strictly in the spirit of commaraderie, so please do not get offended. You guys think prospecting is tough now when you have a telemarketing firm getting you leads . . . think how you would have prospected in the horse and buggy days. I bet that was when "cold callers were cold callers, men were men and smelled like horses." Agents no doubt had to go town to town, go into the local saloon, rode around looking for farms; small business prospecting was going to the dry goods store, the livery stable, the local doctor, the local banker, the school marm .... I can see James now....Instead of putting some pastry and fliers in the staff lounge of a hospital, offering to buy a round at the local saloon.

 

[arnguy]

Many life insurers are not licensed in NY because of: (1) strict regulations, and (2) comparatively low mandated limits on agent commissions. Some insurers get around this by forming a separate company to write business in NY and another company for the other 49 states. Of course, some companies do not license even in the other 49 states for one reason or another.

 

[arnguy]

Many life insurers are not licensed in NY because of: (1) strict regulations, and (2) comparatively low mandated limits on agent commissions. Some insurers get around this by forming a separate company to write business in NY and another company for the other 49 states. Of course, some companies do not license even in the other 49 states for one reason or another.