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Beneficiaries Warned About Life Insurance Payouts

Posted in Life Insurance , Met Life , Prudential

August 16th, 2010
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On Sunday, the National Association of Insurance Commissioners issued a consumer alert about the industry practice of retaining life insurance funds. This alert follows a recent series of subpoenas from the New York State Attorney General to life insurance companies that he suspected were holding funds in retained-asset accounts to grow interest and make money rather than distributing life insurance policy funds to beneficiaries.

Life Insurers Under Fire

Last week, we reported New York Attorney General, Andrew Cuomo, had subpoenaed more life insurance companies in an effort to determine how the retained-asset funds of life insurance beneficiaries were being managed. Among those companies under investigation included MetLife, Prudential Financial, New York Life Insurance Co., Guardian Life Insurance and Northwestern Mutual Life Insurance.

In a meeting the NAIC panel held on in Seattle on Sunday, it was determined in July alone, life insurers had profited by holding and investing millions.

NAIC Issues Alert

As a result of investing the retained-asset funds instead of distributing them, $28 billion was owed to 1 million beneficiaries. In response to its investigation, the NAIC issued an alert to consumers to let them know that they may be able to earn a higher interest rate on their life insurance proceeds if they were to select a different payout option rather than retained-asset accounts where beneficiaries are given a draft book to draw on their money.

Retained-Fund Accounts Aren’t FDIC Insured

In addition to life insurance companies holding on to a beneficiary’s money longer with a retained-asset account, consumers were alerted that these accounts are not insured by the FDIC. In an announcement issued last week, the FDIC told consumers if their insurer was to default over time, it would not be responsible for the beneficiary’s losses. Instead, a state guaranty would cover the losses.

With so much to consider, the NAIC wants to make sure the consumers know what they’re getting into when setting up a retained-asset account. It may be that insurers are looking to benefit the most while beneficiaries wait for the full payout on a policy.

Today’s News: More Life Insurers Subpoenaed, Young Drivers Have Higher Crash Rates and 1 in 5 Californians Uninsured

Posted in Auto Insurance , Health Insurance , Life Insurance , Met Life , Prudential

August 16th, 2010
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Consumers May Mistakenly Believe Life Insurance Accounts Are FDIC-Insured

Posted in Life Insurance , Met Life , Prudential

August 13th, 2010
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The Federal Deposit Insurance Corporation (FDIC) recently revealed concerns that consumers may mistakenly believe their life insurance accounts are FDIC-insured. This concern came in the wake of recent media reports that the life insurance industry may be holding onto money due to beneficiaries rather than issuing them lump sum checks because the interest rates they earn are higher.

Life Insurance Companies Subpoenaed Over Beneficiary Accounts

Recently, New York Attorney General Andrew Cuomo subpoenaed a number of life insurance companies, including Prudential Financial Inc., MetLife, Guardian Life Insurance, New York Life Insurance Co., Genworth Financial Inc., Unum Group and Northwestern Mutual Life Insurance in order to investigate their life insurance policy records.

The normal practice after a policyholder dies is for a life insurer to place money into a retained-asset account, which earns interest that can be withdrawn at any time. Some of the interest is to be paid to the beneficiary and the insurance company keeps the rest.

Cuomo is investigating companies under the suspicion that they are holding the money longer to draw more interest.

Is Your Beneficiary Account FDIC Insured?

As the reports of subpoenas have circulated through various media outlets, the FDIC has become concerned that consumers believe these accounts are FDIC-insured. The corporation says this is not the case.

Instead, in the event that a life insurance company was to collapse, the accounts will be covered by a state guaranty. This guaranty would cover as much as $300,000 per account in 49 states as well as up to $500,000 per account in Connecticut.

The attorney general is in the process of looking into the accounts to determine if the lump sum payments are being held too long. While this all gets straightened out, the FDIC wants to make sure beneficiaries understand their accounts are not insured by the corporation and should look to the state guaranty for collapsed-fund answers.

Today’s News: Abortion Bill Vetoed in Oklahoma, Oil Spill Spurs Home Insurance Concerns and AIG Refuses Unit Buyout Offer

Posted in AIG , Health Insurance , Home Insurance , Life Insurance , Life Insurance Companies , Prudential

July 9th, 2010
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Oklahoma’s governor has vetoed a bill recently passed in the state that would restrict abortion options under health insurance. In other insurance news, some reports have found that the oil spill in the Gulf could have a negative effect on home insurance policies and major life insurance company, AIG, has refused a buyout offer from Prudential, PLC.

Abortion Bill Vetoed in Oklahoma

The abortion language in U.S. health care reform that was so controversial it caused Bart Stupak to retire seems to be causing a bit of controversy at the state level as well. Recently, Oklahoma Gov. Brad Henry vetoed an abortion bill that would place strict limits on when private health insurance companies could cover the procedure. The bill included exceptions for those who had been raped, the victim of incest or if the mother’s life could be placed in danger due to the pregnancy. But the governor believed that the exceptions were too-heavily restricted by time limits and would not truly benefit the victims. (Associated Press)

Oil Spill Spurs Home Insurance Concerns

Now that the waters from the Gulf of Mexico oil spill have made their way to coast lines — and hurricane season is rapidly approaching — some homeowners have expressed concerns that their homes may be the victims of oil-laden waters. However, insurance industry experts say that while they cannot stop the hurricanes from throwing water onto properties, they have the cash necessary to help the properties rebound. According to the National Oceanic and Atmospheric Administration, this hurricane season (June 1 to Nov. 30) could be very active, so homeowners should have home insurance in place to protect their finances during this time. (Hartford Courant)

AIG Refuses Unit Buyout Offer

American International Group (AIG) announced on Tuesday morning that it wouldn’t accept an offer from Prudential PLC — one that would allow the company to acquire part of AIG’s pan-Asian life insurance subsidiary — because it was too low. Instead of accepting the offer for $30.375 billion, the life insurer decided to work with the original deal made with Prudential for $35.5 billion. There is no word as to whether Prudential will honor the first offer once again, leaving some to wonder why AIG turned down the offer with bailout money left to pay back. (Blogging Stocks)

Another Blow to NJ Insurance Rates

Posted in Health Insurance , Prudential

September 27th, 2009
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New Jersey is a state known for having the highest insurance rates in the nation, specifically when it comes to auto coverage. Unfortunately, a move to balance the state’s budget may mean they have the highest health insurance rates as well. Local legislature is considering tax hikes on certain insurance premiums that will ultimately leave more of the state’s residents without affordable health care options.

Tax Hikes Raise Rates

Anymore tax hikes could break an already weak system. For example, Prudential Insurance already pays an astonishing $12-$14 million in taxes in New Jersey. Additionally, Prudential pays $10 million to other states that generally base their taxes on multi-state insurers to the home state tax rate. If the increase passes as penned, Prudential will be responsible for another $6 million dollars in taxes. Prudential’s long-term care and various disability policies would be the hardest hit by the tax increase.

The additional charges would surely be passed onto consumers in the form of Prudential insurance rates, and it would stand true for other providers as well. If passed, the bill would ultimately make a whole slew of insurance unaffordable for those who are already balancing on the financial edge.

Prudential UK Selling Taiwanese Agency

Posted in Prudential

July 16th, 2009
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Prudential has gotten the regulatory approval necessary to sell itsTaiwanese agency business. Due to current state of international financial affairs, Prudential has needed to take strong measures to get more capital.This offloading is a direct move by UK Prudential and should not really have any impact on the Prudential insurance rates Americans are currently paying.

Prudential is not the only financial institution abroad to have to take bold measures to survive the current economy. Other insurance houses are choosing toreduce their dividends, offloading junior debt or purchasing reinsurance cover as a way to balance their books.

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Harvard Physicians Claim Insurers Profiting from Tobacco

Posted in Prudential

July 11th, 2009
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It turns out that the very life insurance companies that charge an arm and a leg to customers for smoking have a vested interest in tobacco companies. Some Harvard physicians unearthed proof that major insurers, both in the United States and overseas,own billions of dollars in tobacco-industry stocks. Just when we thought we knew who we were handing our money over to – and essentially being judged by.

The findings have been published in a recent issue of the New England Journal of Medicine. In the report, thephysicians argue that while they understand the companies wanting to charge more for individuals who they feel have a longer life expectancy, it’s a bit hypocritical to play both sides of the fence. By owning so much in tobacco stocks, the companies profit substantially from their clients’ tobacco use twice – with higher premiums, and their cigarette consumption.

A spokesperson from Prudential, one of the insurance companies listed in the report, has acknowledged that the figures are, for the most part, accurate. However, other insurers have strongly disputed the claims in the report, instead focusing on places they want the public to know their money is being distributed to.

With all but one company denying any direct ties to the tobacco industry, questions have begun to surface about the validity of the report. Additionally, it has been found that all of the insurers sell mutual funds, which means that some of their exposure to tobacco stocks would stem from client assets in index funds.

It just doesn’t seem that the discrepancies between the stories should be so broad. So who’s telling the truth? It’sno secret that major companies have been good about sweeping certain details under elaborate rugs. So at the moment, we will have to rest with the “he said, she said” clause and just see what happens as more of the story unfolds.

The Prudential Insurance Company History

Posted in Prudential

June 23rd, 2009
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Since 1873, the Prudential Insurance Company has been providing insurance coverage to those in need. The company was first incorporated at that time as the “Widows and Orphans Friendly Society,” however after two years timeJohn F. Dryden, the founder of the entire organization swapped the name to “The Prudential Friendly Society.” In 1877, the name officially becameThe Prudential Insurance Company of America and has stuck ever since.

From Prudential’s first prospectus, the company’s goal was to provide “Relief in sickness and accident for people of meager means, pensions for old age, adult and infant burial funds.” The original goals were tailored to the specific needs of the new crop of immigrants arriving to the United States, and still stands true today.

Prudential has now grown into one of the largest diversified financial institutions in the world. Not only can consumers get policies with Prudential insurance rates, the company also offers investment opportunities, residential real estate related businesses, provides employee benefits and is a home mortgage lender.

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