Originally Posted by smjsl
Thanks a lot for the info and interesting read clifp. One question I have relates to following two statements:
So, for those that had under 100k, did they also see 30-50% reduction or did any reductions only apply to amounts over 100k?
(P.S. I assume 100k would become 300k for states with those higher limits...)
I am not sure. Most of the specifics I found by skimming a couple hundred pages of Congressional testimony, lead by Congressmen Waxman. Congressional testimony tends to be long on anecdotes and short on actual data. One of the anecdotes was person who's disability payment was reduced from $2,000 to $1,300/month. Making some interest rate and life expectancy assumptions (both of which could be way off) this is equivalent to a annuity in the 200K range more than 100K but less than the CA limit of 250K. The Exec life situation was unusual (but then I think all failure of financial institutions are unusual) in that the State guaranty step it to make the policy holders whole, but then 1/2 dozen years latter the settlement started to fall apart.
One huge difference between the state insurance guaranty associations and the FDIC is that the FDIC collects a portion (~.5% to 1%) of all deposits so when a bank fails the FDIC has money to make depositor whole. The association assess its member after an insurance companies fail, so think about them the same way as the EU is funding the Greek bailout a lot of pleading, cajoling, and threatening.