Prosperity-Time for another Look

[Life Hawk]

In reality that ability to assess is a good thing. If it came to that the companies that can't do it are bankrupt. No company can guarantee anything beyond the claims paying ability of the company.

Can anybody name one company that stopped paying life claims because of bankruptcy... that wasn't moved or purchased?

 

[Newby]

You are omitting the ones that cannot assess are backed by the state guaranty plans which tend to be stronger than ability to assess.

It might be. But can you ever run into one single person who has been upset about their coverage with a fraternal due to an assessment? I can say that I haven't. Never heard of anyone that even knew anyone that had an issue with a fraternal. And one did do an assessment within the past 5 or 10 years. Foresters Catholic Union I believe? None of their insured probably even knows about it. It didn't affect anything they did unless someone would have wanted to take a max loan during the assessment. Other than that it's a good system.

Why do you think fraternals got to opt out of participation in the State Guarantee funds? If they needed it, wouldn't the DOI's have required them to in there too? The whole formation of the a State Guarantee Fund was a reaction by the insurance industry because the government was threatening to create something similar to FDIC insurance that banks have. Why do you think the insurance industry didn't want that? Why would they not want a system where the states REALLY guaranteed the consumers when their company failed? Have you ever sold for a company that failed and actually used state guarantee funds? Were those customers happy with you and the company you sold them?

People on this forum have tried long and hard to find horrible examples of drama from fraternals who failed financially and had to assess their members. You can find assessments. But the members are made 100% whole in almost every case. And the members are happy. Most never even knew the company had gone through anything. The worst one the forum has come up with was a small pre-need company that did not recover even after using the assessment and was sold off. Those members had a 20% reduction of benefits as part of the conditions of the sale. It affected hundreds of members if I remember correctly. That's a small company. So a few hundred members out of millions that are covered by fraternals had a 20% reduction. Many fraternals are priced 15 to 20% lower than their competitors to start with. Pretty small risk for high chance of reward.

Compare that to people who have been with non-fraternal companies that fail. Wow! Much less happy. Oh? You mean my policy is frozen? For several years? Oh? You mean State Guarantee fund doesn't mean the STATE is guaranteeing anything? And fund doesn't mean there are funds set aside for this. There are no funds? The insurance companies have to raise funds AFTER the company fails? In the states won't contribute one single penny? And there are exclusions? And limits? And my agent was required by contract to tell me to never rely on this but only to rely on the ability of my insurance company to pay the claims? Doesn't sound like a perfect system.

 

[HoosierLife]

It might be. But can you ever run into one single person who has been upset about their coverage with a fraternal due to an assessment? I can say that I haven't. Never heard of anyone that even knew anyone that had an issue with a fraternal. And one did do an assessment within the past 5 or 10 years. Foresters Catholic Union I believe? None of their insured probably even knows about it. It didn't affect anything they did unless someone would have wanted to take a max loan during the assessment. Other than that it's a good system.

Why do you think fraternals got to opt out of participation in the State Guarantee funds? If they needed it, wouldn't the DOI's have required them to in there too? The whole formation of the a State Guarantee Fund was a reaction by the insurance industry because the government was threatening to create something similar to FDIC insurance that banks have. Why do you think the insurance industry didn't want that? Why would they not want a system where the states REALLY guaranteed the consumers when their company failed? Have you ever sold for a company that failed and actually used state guarantee funds? Were those customers happy with you and the company you sold them?

People on this forum have tried long and hard to find horrible examples of drama from fraternals who failed financially and had to assess their members. You can find assessments. But the members are made 100% whole in almost every case. And the members are happy. Most never even knew the company had gone through anything. The worst one the forum has come up with was a small pre-need company that did not recover even after using the assessment and was sold off. Those members had a 20% reduction of benefits as part of the conditions of the sale. It affected hundreds of members if I remember correctly. That's a small company. So a few hundred members out of millions that are covered by fraternals had a 20% reduction. Many fraternals are priced 15 to 20% lower than their competitors to start with. Pretty small risk for high chance of reward.

Compare that to people who have been with non-fraternal companies that fail. Wow! Much less happy. Oh? You mean my policy is frozen? For several years? Oh? You mean State Guarantee fund doesn't mean the STATE is guaranteeing anything? And fund doesn't mean there are funds set aside for this. There are no funds? The insurance companies have to raise funds AFTER the company fails? In the states won't contribute one single penny? And there are exclusions? And limits? And my agent was required by contract to tell me to never rely on this but only to rely on the ability of my insurance company to pay the claims? Doesn't sound like a perfect system.

On this topic, I remember reading on the forum years ago that it was "against some rule" to induce a replacement of a fraternal based on the possibility for assessment or it's lack of participation in the State Guaranty Fund.

Is that the case or did I mis-remember?

 

[rousemark]

It might be. But can you ever run into one single person who has been upset about their coverage with a fraternal due to an assessment? I can say that I haven't. Never heard of anyone that even knew anyone that had an issue with a fraternal. And one did do an assessment within the past 5 or 10 years. Foresters Catholic Union I believe? None of their insured probably even knows about it. It didn't affect anything they did unless someone would have wanted to take a max loan during the assessment. Other than that it's a good system.

Why do you think fraternals got to opt out of participation in the State Guarantee funds? If they needed it, wouldn't the DOI's have required them to in there too? The whole formation of the a State Guarantee Fund was a reaction by the insurance industry because the government was threatening to create something similar to FDIC insurance that banks have. Why do you think the insurance industry didn't want that? Why would they not want a system where the states REALLY guaranteed the consumers when their company failed? Have you ever sold for a company that failed and actually used state guarantee funds? Were those customers happy with you and the company you sold them?

People on this forum have tried long and hard to find horrible examples of drama from fraternals who failed financially and had to assess their members. You can find assessments. But the members are made 100% whole in almost every case. And the members are happy. Most never even knew the company had gone through anything. The worst one the forum has come up with was a small pre-need company that did not recover even after using the assessment and was sold off. Those members had a 20% reduction of benefits as part of the conditions of the sale. It affected hundreds of members if I remember correctly. That's a small company. So a few hundred members out of millions that are covered by fraternals had a 20% reduction. Many fraternals are priced 15 to 20% lower than their competitors to start with. Pretty small risk for high chance of reward.

Compare that to people who have been with non-fraternal companies that fail. Wow! Much less happy. Oh? You mean my policy is frozen? For several years? Oh? You mean State Guarantee fund doesn't mean the STATE is guaranteeing anything? And fund doesn't mean there are funds set aside for this. There are no funds? The insurance companies have to raise funds AFTER the company fails? In the states won't contribute one single penny? And there are exclusions? And limits? And my agent was required by contract to tell me to never rely on this but only to rely on the ability of my insurance company to pay the claims? Doesn't sound like a perfect system.

I do not seek "horrible" examples of either side. I have been accused of being a fraternal hater but that is not true either. I simply think there should be a full disclosure of both sides. I have posted the letter that ACA certificate holders received that notified their cash values and death benefits were reduced due to an assessment. When RA took over the certificates after ACA being declared insolvent they left the assessments in force. Have no idea if those certificate holders were happy about it or not.

 

[Tahoe Ray]

On this topic, I remember reading on the forum years ago that it was "against some rule" to induce a replacement of a fraternal based on the possibility for assessment or it's lack of participation in the State Guaranty Fund.

Is that the case or did I mis-remember?

You cannot use the existence of the guaranty associations as an inducement to buy a policy.

 

[PA Bill]

I wouldn't hesitate to take out coverage from a fraternal, so why would I hesitate to sell one? Just like cancer insurance. I took out a United American cancer policy years ago, so I'm thinking about starting to sell some cancer coverage (that one's for you, Rouse).

 

[DonP]

Tons of agents use the certificate issue to replace them. "Mrs. Johnson i represent 30 different co's such as Moo,Blue Cross and Gerber. My job as an independent agent is to get you the best price with the most insurance i can. I work with seniors 50-80 and all have different health problems . One company might take Heart problems and another company won't. I'm like Target and Walmart coming to you so you get the best price"

 

[DayTimer]

 

[rousemark]

You cannot use the existence of the guaranty associations as an inducement to buy a policy.

True.. You aren't supposed to mention the Guaranty Association when proposing the policy but you are supposed to disclose it when delivering the policy.. Go figure.

My only objection is fraternal agents telling people, you coverage can never decrease and your premium will never go up.. That may be technically true but it is definitely misleading.. If I had a policy and they hit me with an assessment that my death benefit and cash values were decreased by 25%, then I would think wither my premiums went up or my coverage deceased.

Here is the first letter sent to certificate holders by RA...

Dropbox - Royal Arcunum Letter ACA.pdf - Simplify your life

Notice paragraph two which reads in part..

This assessment is needed to ensure the protection of the policyholders. If an additional assessment had not been put in place, the Rehabilitator would have likely been forced to convert the rehabilitation proceeding into one of liquidation, which would effectively terminate the life insurance policies and convert policyholders into preferred creditors of ACA with a claim equal to the amount of their cash surrender value. Such an outcome would have halted claims payments for an indeterminate period of time and left uninsurable policyholders without insurance

 

[DayTimer]

Here is the first letter sent to certificate holders by RA...

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