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Life Insurance Industry - Looking out for the Consumer??
Old 04-25-2011, 04:27 AM   #1
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Life Insurance Industry - Looking out for the Consumer??

As if the creds of agents could not be further tarnished.

Life insurance and annuity products are becoming more complex, not less complex!


Life-Insurance Licensing Test Is Too Hard, Biased, Primerica Says - WSJ.com


I wonder if the same argument could be made for professional engineers! That safety stuff is just a big conspiracy!
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Old 04-25-2011, 06:12 AM   #2
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Quote:
Originally Posted by chinaco View Post
As if the creds of agents could not be further tarnished.

Life insurance and annuity products are becoming more complex, not less complex!


Life-Insurance Licensing Test Is Too Hard, Biased, Primerica Says - WSJ.com


I wonder if the same argument could be made for professional engineers! That safety stuff is just a big conspiracy!
I'm still scratching my head as how a insurance test can be cultural biased .


I don't see any dangers to having people with room temperature IQ sell equity index annuities, to senior citizens, what could possibly go wrong?
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Old 04-25-2011, 06:26 AM   #3
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Maybe if the tests were "harder", situations such as this would not occur:

States reach insurance agreement with John Hancock - Yahoo! News

"We're disappointed that our willingness to behave in a consumer-friendly way is being repaid by having our reputation besmirched," Chiel said.

...
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Old 04-25-2011, 07:39 AM   #4
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Quote:
Originally Posted by chinaco View Post
As if the creds of agents could not be further tarnished.

Life insurance and annuity products are becoming more complex, not less complex!


Life-Insurance Licensing Test Is Too Hard, Biased, Primerica Says - WSJ.com


I wonder if the same argument could be made for professional engineers! That safety stuff is just a big conspiracy!
Judging by the quality of talent that Primerica attracts, I'd say they should make it even harder....anyone with half a brain can pass the licensing test after studying for a day. Amazing how many stupid agents I come across.

Quote:
Some regulators worry that simplifying the tests could open the door for unqualified people to sell complicated policies. They say the problem isn't necessarily the tests—which some other big insurers haven't faulted—but Primerica's own recruiting program. While some companies require candidates to have college degrees and even securities licenses, Primerica is different. It lets almost anyone sign up, so long as they don't have a criminal record and can pay a $99 fee to cover training and licensing costs, among other minimum standards.
Yeah, the test is the problem here....womp womp womp.

Quote:
"The test is really tricky," says David Benjamin, 51, an African-American who has flunked Louisiana's exam about a half-dozen times. He says he doesn't want to use racial bias "as an excuse," chalking up his failures in part to his inexperience taking tests since he graduated from Grambling State University in 1983. "For one thing, when you walk in the testing center, you're so nervous, you feel like you're going to rob a bank," he says.

Mr. Benjamin, who over the years has run a restaurant, sold shoes, taught school and coached sports, but was recently jobless, says he has gotten close to a passing score and intends to keep trying. "It's the only thing out there" amid high unemployment, he notes.
I feel sorry for this guy's future clients.
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Old 04-25-2011, 07:51 AM   #5
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This whole thing is overblown. The cited situation of continuing premiums for seven years after the insured died is sensational, but is because the executor didn't do their job in filing a claim (perhaps didn't know a policy existed). It is spun as a capricious money grab by the insurer, but the reality is that the insurer was probably just following the terms of the contract with the policyholder, as they should.

Actually, this is more a money grab by the states to redefine what is abandoned property that must be turned over to the states by the insurer for 'safekeeping" - and after a certain amount of time the state gets to keep the money if no one claims it.

Most life insurance contracts have provisions that if a premium payment is missed that a policy loan for the premium due is automatically made to keep the policy in force which keeps the life insurance protection in force for the policyowner. Under the contract, if the premium payments continue to not be made the automatic loans would continue until there is no cash value left, at which point the policy would lapse due to non-payment of premium. This has been a standard practice by most insurers for decades and is intended to keep the coverage in force unless the policyholder communicates to the insurer that they want to surrender the policy, at which point the policyholder would be paid the remaining cash value. So if the policyholder moves and forgets to inform the insurer and misses some premium payments then their coverage would not lapse. Or if they have some temporary cash flow problems but still need the coverage they can use this feature to keep the coverage in force.

So the companies in question have simply been following the provisions of the contract, and the same procedure has been followed for 50 years or more.

While I agree that a better practice would be for the company and/or the agent to chase the policyholder after a certain number of premium payments have been missed to see what the policyholder wants to do with the policy, the insurer is not under any legal obligation to do so and has not historically been obligated to do so. The insurance regulators are now changing the rules.
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Old 04-25-2011, 08:12 AM   #6
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While I agree that a better practice would be for the company and/or the agent to chase the policyholder after a certain number of premium payments have been missed to see what the policyholder wants to do with the policy, the insurer is not under any legal obligation to do so and has not historically been obligated to do so. The insurance regulators are now changing the rules.
And that's the crux of the situation, IMHO.

I'll assume the insurance company does this "automatically", but I would also expect that any actions taken (initiated by me, or in my behalf through "automatic" means) be communicated to me (policy holder).

So who was getting the mail? Or in the case of email, was a communication put into place to ensure that the action is know by the policy holder (living or dead).

While I would agree that "in a perfect world" anybody liquiditating the estate upon death "should know" about any outstanding policies, that may not be the case for a lot of folks.

If the change in law corrects this oversight, regardless of the "communicatons gap", than I agree with it. Just because there is no current "legal obligation", there is a moral reason, and just plain customer communication requirements that need to be met.

Heck, it's the same thing as I do for all our bills. While I get electronic notifications of an upcoming bill, I don't turn off snail-mail. DW/me have separate email accounts, each for "our stuff". If I suddenly pass away, I don't want her to worry about checking for (unpaid) bills on my email account. She will know because of the bill that will come in the mail.
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Old 04-25-2011, 08:21 AM   #7
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In regards to the JH article, people can't have it both ways and what they did is standard practice. How will the insurance company know the person is dead if nobody ever told them? If companies automatically just cancelled policies with a cash value for non-payment of premium instead of using automatic premium loans, people would complain about that too.
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Old 04-25-2011, 12:55 PM   #8
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In regards to the JH article, people can't have it both ways and what they did is standard practice. How will the insurance company know the person is dead if nobody ever told them? If companies automatically just cancelled policies with a cash value for non-payment of premium instead of using automatic premium loans, people would complain about that too.
It can actually be pretty tricky to identify the insurance company and let them know.

In reviewing accounts for my mother's estate, I discovered that my poor mom had been leaking $4.00 a month from her checking account as an automatic debit, paid to something identified as only a 1-800 number. On calling the number, the voice at the other end announced they were "----- ----- Gold Account Services." It took a little bit of back and forth, but the charge was identified eventually as a policy payment for accidental death and dismemberment insurance on my dad, who had passed away 12 years before.

The customer service representative directed me to mail a certified death certificate to a specific address. The certified death certificate and a cover letter including account information and a summary of the conversation described above was sent by certified mail, return receipt requested. I got back a letter acknowledging receipt. They also indicated that because the policy was established with a third party that they could not cancel it, and that I should call the original 1-800 number to terminate the "Supplemental Insurance."

They took another $4.00 out of the account. Yeah, shocking...

The bank and insurance company tried to blow it off, blaming each other. The bank put a 'stop payment' on the debit, but it mysteriously didn't work. (The insurance unit is part of the bank, but they don't want to admit it. Their stops won't block internal transfers.) Soooo...

I filed a complaint against the bank and insurer via the Office of the Comptroller of the Currency, including copies of the correspondence, call logs, and related information. Copies were sent to the bank CEO (to get into the special complaint handling system often tied to the CEO office), and to the Executive VP for Consumer Products, just for fun.

The goal wasn't to recover anything. The goal was just to cost the bank/insurer more in expenses dealing with OCC than they took from Mom over the last 12 years. Surprisingly, they did eventually pay back 12 years of premiums for insuring a dead person.
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Old 04-25-2011, 12:59 PM   #9
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It can actually be pretty tricky to identify the insurance company and let them know.

In reviewing accounts for my mother's estate, I discovered that my poor mom had been leaking $4.00 a month from her checking account as an automatic debit, paid to something identified as only a 1-800 number. On calling the number, the voice at the other end announced they were "----- ----- Gold Account Services." It took a little bit of back and forth, but the charge was identified eventually as a policy payment for accidental death and dismemberment insurance on my dad, who had passed away 12 years before.

The customer service representative directed me to mail a certified death certificate to a specific address. The certified death certificate and a cover letter including account information and a summary of the conversation described above was sent by certified mail, return receipt requested. I got back a letter acknowledging receipt. They also indicated that because the policy was established with a third party that they could not cancel it, and that I should call the original 1-800 number to terminate the "Supplemental Insurance."

They took another $4.00 out of the account. Yeah, shocking...

The bank and insurance company tried to blow it off, blaming each other. The bank put a 'stop payment' on the debit, but it mysteriously didn't work. (The insurance unit is part of the bank, but they don't want to admit it. Their stops won't block internal transfers.) Soooo...

I filed a complaint against the bank and insurer via the Office of the Comptroller of the Currency, including copies of the correspondence, call logs, and related information. Copies were sent to the bank CEO (to get into the special complaint handling system often tied to the CEO office), and to the Executive VP for Consumer Products, just for fun.

The goal wasn't to recover anything. The goal was just to cost the bank/insurer more in expenses dealing with OCC than they took from Mom over the last 12 years. Surprisingly, they did eventually pay back 12 years of premiums for insuring a dead person.
For some reason, people buy life insurance and then never tell their beneficiaries. How their beneficiaries are supposed to know what was in place or what company it was with, I have no idea....but yes, it is a problem, one that can easily be rectified if people would just let their beneficiaries/family members know about the coverage. Can't tell you how many posts I see on one website I visit with people asking how to find out about their dead parents' life insurance...
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Old 04-25-2011, 02:19 PM   #10
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To boot all the folks are trying to sell something other than term life insurance: (Which is simple, you pay the premium you get protection for the period of the premium end of story). They want to sell you some investment product that also has an element of insurance. Consumer lesson about life insurance: If you need it buy term, because once the kids are gone you probably don't need any or minimal to pay burial expenses, since if you die broke the banks are just in out the money.

Now I will admit I am still paying on a whole life policy from 1968 but by now it almost costs nothing as the cash value increases about as fast as the premiums are paid. In addition because it is an old participating policy there are nice dividends as well.
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