what will happen to life insurance policies if the economy worsens?

[grasswire]

In some other countries, the pension funds have been grabbed by the government. I'm wondering about life insurance companies. Could the insurers fail to deliver? What happens to insurance monies when a country goes under?

[Oceansaway]

1. another T.O.W. (transfer of wealth)

the government will suck it up & give it to the wealthy.

[grasswire]

2. so should I continue to pay on my policy?

That's the real question.

[Ruby the Liberal]

5. Yes.

Depending on the type of policy, if you stop payments and lapse you could find yourself in a position of paid up premiums (from any cash value), reduced payout (as long as the premiums + cash value last) or forfeiture. And that is only if you have a cash value policy. If you have a term policy, you will be shit out of luck in ~31 days from the last payment.

[Ruby the Liberal]

3. There are earmarked state funds similar to FDIC that insure insurance companies

Check with your state for specifics.

[soryang]

4. They don't deliver now on SGLI

They keep the money in an account that they hold and dole the money out as if it was theirs.

Ever try to withdraw more than a few thousand from your savings account? You "have to see the bank manager." He asks what do you want the money for as if you have to explain what you are doing with your own money. When I get that crap, I empty the entire account or accounts at once.

[Ruby the Liberal]

6. Please be careful in giving blanket insurance/financial advice as

it varies by company and state law.

[soryang]

7. You are the only one here giving advice

SGLI is a federal program that was privatized. Prudential apparently got the contract and started raising the rates immediately.

[Ruby the Liberal]

9. No, I am talking in generalities about what can happen

You on the other hand are talking in absolutes about what will happen. That is all I am cautioning about, especially given the question is whether to drop premium payments.

Remember, insurance (under McCarran-Ferguson 1945) is governed by each state, not federally.

[soryang]

8. SGLI and VGLI beneficiaries complaining to Congress

http://www.examiner.com/veterans-issues-in-dayton/veterans-affairs-to-ensure-beneficiaries-are-protected-under-sgli-and-vgli-programs?render=print

Veterans Affairs to ensure beneficiaries are protected under SGLI and VGLI programs
September 15th, 2010

Recently beneficiaries of Servicemembers Group Life Insurance (SGLI) and Veterans Group Life Insurance (VGLI) have been complaining to the Department of Veterans Administration (VA) and their congressional representatives about their treatment by Prudential Financial who services those two insurance programs.

The complaints center around the policy of Prudential Financial and the company's policy of placing the death benefit payments of fallen troops and veterans into interest-earning accounts instead of immediately turning the money over to the deceased's next-of-kin.

The complaints and the Prudential policy has caused Prudential to fall under the eye of a congressional microscope and caused a myriad of documents to be turned over to the House Committee on Government Oversight on Aug. 23 as part of its investigation.

The investigation has also brought scrutiny from the Senate Banking, Housing and Urban Affairs Committee which called for hearings this month.

[EC]

10. Maybe enough people won't be able to afford to keep up

their policies and the insurance companies will luck out..:sarcasm:

[doc03]

11. What will happen to the annuities many retirees depend on

for income (they come from the life insurance companies).

[jtuck004]

12. Absolutely they could fail to deliver. The newspapers have been

full of institutions for years that have not delivered on the promises they made. This includes pension funds, state and federal governments, insurance annuities, etc. State insurance funds, the FDIC and others all exist to guarantee those returns, but what happens when the assets they hold devalue?

Your qualification above is the kicker - "What happens to insurance monies when a country goes under?". Because most funds are required to hold assets to cover such eventualities and the rules require them to hold the safest assets, they hold Treasury Bonds and Bills, guaranteed by the full faith and credit of the U.S. Government. But if the "country goes under" there may be nothing to backstop it - especially for the largest economy on earth.

We have all watched as institution after institution did not have the assets to pay off on the business they have sold. AIG and the recent Wall Street bailout is but one example, and there is speculation in print that some of the products they sold are STILL in pensions, state government funds, and other places, hidden behind a veil of secrecy in some cases. Assets are still being kept at inflated values, and inflated values nearly always come to a reckoning. Their recklessness, combined with the hollowing out of our job base over the past 40+ years, have left us in a precarious position.

What will happen is anyone's guess, but this is the kind of world in which it pays to make sure you have as many of the bases covered as you can afford.

You should talk with a financial adviser if you are concerned about your own assets, preferably one that doesn't have a stake in what you buy.

[fasttense]

13. A life Insurance policy is only as good as the corporation you bought it from.

Seems to me I heard about property/house insurance that failed to pay when Katrina came through. Theses corporations claimed you had to have FLOOD Insurance or they wouldn't cover your losses.

The tax payers covered AIG's losses because it helped the uber rich. But when it comes to the little guy, I seriously doubt a bankrupt state would make sure you get your life insurance payout.

Insurance companies seem to be in the business of not providing the service you paid for and the gubermint is letting them get away with it. Just look at health insurance corporations.

[txlibdem]

14. Have you ever seen an insurance executive driving around in a cheap or crappy car?

Or wearing off-the-rack suits? They're ridin' high, that's for sure.

Where do you think all their money comes from? You said it in your post: the job of an insurance company is to separate you from your money then make damn sure they don't have to pay out to you (or your loved ones) ever. Typical Capitalist Ponzi Scheme. Promise you that their product is going to do everything they promise when in the end it will sorely disappoint (ahem... iPhone).

[Warpy]

15. When my dad bought a $3000 life insurance policy in 1939

before he went overseas to the UK, that policy would have bought a very nice house, put someone through 4 years of college including living expenses, or do things now you'd need 100 times that amount to do. He suffered to put money toward that thing and paid it off. When I cashed it in after his death, the face value had grown to a whopping $4500.

While I can see life insurance policies as being a good thing for young families, it's really quite a racket. The company had full use of my dad's money for 67 years, years that saw the ability to make that money grow 100% many times over. They gave him a 50% return on his investment over that time, an investment that had lost about 95% of its value over the same time.

Life insurance companies are not going out of business any time soon, people. This is how they operate and why they have the biggest skyscrapers in a lot of cities and so many of our fine government people in their pockets.