Examples of countries on the list are: Somalia, Iraq and Haiti. In these countries, workers, including those volunteering in the aftermath of disasters and those working for construction companies, are likely to struggle to get life insurance. In Somalia crew members or divers who are there in order to profiteer are very unlikely to obtain life insurance.

Whether working for aid organizations, construction companies or adventuring in Somalia, the one thing all these employees have in common is that life insurance is a headache to find either for themselves or by employers on their behalf.

Aid workers Struggle to get Life Insurance

According to Ryan Pinney of Pinney Insurance Center, California “The more unstable and dangerous a country is and the more likely something bad will happen, the less likely you are to get insurance, not even from Lloyds of London which provides specialty insurance if you can pay the price”.

Members of the Red Cross and Peace Corps have to find life insurance for themselves because, as Pinney states “neither agency provides it for their volunteers” and, it could cost “24 to 50 per cent more for a policy because of the danger.”

31 Countries are Considered ‘Unstable’

According to the State Department’s web site a travel warning is issued when “long term protracted conditions make a country dangerous or unstable” and thereby “lead the State Department to recommend that Americans avoid or consider the risk of travel to that country.”

There are currently 31 countries on the list and reasons for being on the list vary from war to physical instability to terrorism or to the type of rebel violence recently witnessed in Mexico. People travelling to, or working in these countries face a daily high risk of being kidnapped, injured or killed and life insurance companies can feel that the costs of insuring anyone working in these conditions is prohibitive .

Government provides Life Insurance for the Military

The military obtain life insurance through the US government and many private insurance companies are willing to insure servicemen too, but the majority of life insurance companies will not provide insurance for contractors or volunteers working in war zones.

Source: SSCI-Iraq.com

 photo credit: timsnell

Which Type of Life Insurance Would Best Suit you as a Business Owner?

When taking out life insurance as a business owner there are some things which should be considered such as whether to take out term or permanent insurance. Term life insurance is a relatively simple idea – you decide on the level of cash payment which would be paid out upon the event of your death, and also on the term of the coverage e.g. $400,000 over 25 years. This can be a good way of making sure a mortgage balance would be repaid for instance.

This might also be a good type of life insurance for a business owner with a partner who is planning on retiring at a fixed date. For a couple running a business together they could agree that if either one dies before their planned retirement date, the partner left behind would be able to purchase their deceased partner’s share in the company. Term policies could be taken out making either partner the beneficiary.

This could be a good option to cover the business – but the problem with term insurance is that once the qualifying period runs out – say, after 20 years, then the company would no longer be covered. And, as the business gets older, so do the owners, which means taking out term insurance later on will be more costly. When term insurance ends without the policy owner having died, there will be no cash payment.

Would Permanent Life Insurance be a Better Option for Business Owners?

Permanent life insurance policies include both insurance as well as some investment, or ‘cash value’. The premiums pay, not only for your life insurance coverage, but some is used for investment purposes. The upside of this is that – when the term of the insurance ends, you will still have the investment element to call upon. Plus, permanent life insurance continues for the whole of a person’s life – and so may be more attractive to those wanting coverage for longer.

Plus an additional benefit to a business owner is that the investment component of the policy can be borrowed against and used to further the company – or the policy owner can use the funds to repay premiums.

Life Insurance for Key Employees

Life insurance can also be taken out by business owners on key employees to cover them in the event of their death – should that employee die the insurance would cover them for the loss of income entailed and help fund them in finding a replacement.

Life insurance for a business is often in place for buying out the remaining partners in the event of the premature death of one of the owners. The insurance can cover all the key members of the business. Before deciding which type of insurance to buy – business owners should get in touch with a financial advisor who can help identify the pros and cons of the various life insurance policies on offer.

Source: Karin Price Muewller at Entrepreneur.com

photo credit: Greg317

The agreement was only made public due to a request filed to the Freedom of Information Act. The agreement, forged in 1999, was never put in writing – it allowed the life insurance company to withhold large sums of money which should have been passed directly to survivors – money which went on to make the Prudential a substantial sum in interest.

Grieving Families Disallowed Life Insurance Payouts

Brendan Bridgeland , a lawyer with the not-for-profit group Center for Insurance Research based in Cambridge Massachusetts, said that for a decade Prudential had not been fulfilling its obligations to veterans;  and that it was very clear that Prudential had been “violating the terms of the original contract.”

The revelations have appalled veterans who have accused the Prudential of “brazen war profiteering.” Paul Williams who served in the Afghanistan war as an army cavalry scout stated “When grieving families tick the box that they want a lump sum they should get it.”

Prudential and Other Insurance Companies to Face Fraud Investigation

New York Attorney General Andrew Cuomo has launched a fraud investigation into both the Prudential and other life insurers over the use of ‘retained asset accounts.’ Under the original VA contract with the Prudential the insurance company was “required to send lump sum payouts to survivors requesting them.”

However instead of life insurance payouts the Prudential was issuing families with ‘check books’ or IOUs which are not insured by the Federal Insurance Deposit Corp. The withheld payouts to survivors have were placed in investment accounts, earning the insurer over eight times more in interest than that paid in interest to beneficiaries. Prudential held over $662 million of survivors’ assets in its corporate account in June of this year.

Veterans’ Families have Good Case for Suing Life Insurer for Lost Interest

According to Bridgeland the families have a very good case for suing the Prudential. The Prudential insists it was acting in accordance with the wishes of the VA who, in a bid to salvage the situation has attempted to put in writing the changes only verbally agreed in 1999. According to insurance law Professor Jeremy Stempel this is simply an attempt to ‘reinvent history’ giving nothing to ‘the people in uniform.’

Source: Bloomberg

photo credit: DVIDSHUB

Whole Life Policies Show Biggest Increase in Sales

Whole life policies, offering death benefits with additional savings features showed the sharpest gain with sales rising by 23%. Life insurance products which have just guaranteed death benefits went up by 5%.

Half of Insurers Saw Double Digit Growth

Ashley Durham, a senior analyst at Limra stated “Things appear to be looking up” and added that “nearly half of all companies experienced double-digit growth during the first half of the year.” New York based Met Life, the largest life insurance company in the USA, saw increased earnings as did Prudential who reported a sevenfold increase in profits on investments compared with the previous year.

According to Limra Term Life Insurance was the only product which saw a decline in sales in the second quarter with premiums dropping by 11%.

Source

• Inyoung Hwang –25  August, Bloomberg Businessweek

photo credit: kevinzhengli

• A divorce or marriage, leading to a name change
• A house move where no forwarding address has been left
• Illegible or badly written records
• Transient lifestyles such as those in the military
• And, most common of all: The heir or beneficiary has died without the knowledge of the life insurer.

According to NAUPA (National Association of Unclaimed Property Administrators) state departments across America are sitting on $32.877 billion in unclaimed funds, including life insurance benefits. The New York department holds a staggering $9.9 billion worth of unclaimed assets, and the state of California $5.4 billion.

Life Insurance Policies One of the Biggest areas of Unclaimed Assets

Figures from demutualized Life Insurers show that after becoming public companies, they needed to find millions of policy holders and beneficiaries – totaling $4 billion in unclaimed assets. On demutualization, John Hancock found it did not have current addresses for 400,000 current policy holders; Prudential did not know the whereabouts of 1.2 million of its policyholders, and Met Life held $2.7 billion worth of unclaimed demutualized assets.

Government takes control of Unclaimed Life Policy Funds after 3-5 Years

When a life insurance company receives notification of the death of the policy holder the law states that any unclaimed assets from the demutualization have to be placed in a government trust, if, the listed beneficiaries cannot be found. If there has been no notification that a life insurance policy holder has died and the policy owners cannot be traced, then Life Insurers tend to hold onto life policies until the owner would have reached 100 years of age before handing funds over to the treasury.

Could You be Missing Out on a Payout from an Unclaimed Life Insurance Policy?

If you think you might be a beneficiary of an unclaimed life insurance policy it is worth investigating. It’s worth remembering that even if the Life Insurer holding your potential funds no longer exists there will still be the possibility of a payout of up to $300,000 because the funds should have been placed in a state insurance guaranty association.

Sources

• NAUPA
• MSN Money: Unclaimed Billions How Much Is Yours? Liz Pullman Weston

photo credit: swanksalot

Dubious Ethics Not an Issue for Insurance Agents or Investors

Regulators were startled by the huge rise in the number of ‘stranger-originated’ policies being sold in this way – between the years of 2004 and 2008 it became a billion-dollar industry. Although the agents often set up the deals at huge financial gain to themselves, it has to be noted that investors were happy to climb on the bandwagon.

Despite only narrowly skirting the “insurable interest law” which prohibits a third party owning an insurance policy when they could have no conceivable interest in the well-being of the person holding it – (far from it in fact), the practice was legal across quite a few states until recently.

A bar graph showing the growth in life settlement policies.

Insurers File Civil Actions against Agents for Life Settlement Policies

Insurance companies claim insurance agents misrepresented their clients’ assets when looking to purchase life insurance policies for them, with many committing acts of outright fraud when filling in the application forms. According to them, in an attempt to secure policies, over eager agents, fueled by greed, inflated the estimated wealth of their clients and fraudulently answered ‘no’ when asked if they had any plans to sell the policies on.

For this reason insurers such as AXA have voided many of these insurance policies, leaving investors with now-worthless investments – unsurprisingly they are also suing the brokers for compensation.

Wealthy Insurance Agent in Trouble for Life Plan Fraud

One insurance agent being pursued in a high profile case, is Steven M Brasner, accused of committing grand theft and fraud when acting as the middleman in securing $78 million worth of insurance policies, netting him over $2 million in commission.

An illustration of the life insurance securitization process, which is complicated and similar to mortgage securitization.

He is charged with lying on his clients’ application forms in order to secure life insurance policies for them.  As well as facing state prosecution Mr Brasner is also being pursued through the civil courts by the insurance companies and investors he dealt with.  Mr Brasner is believed to have inflated his client’s net worth sometimes by up to six times in order to secure business. Steven Brasner is just one among many agents who are being pursued – there are over 200 civil lawsuits pending, filed by insurers. Judge John Meyer noted that the level of fraud was ‘astounding.’

Mr Brasner has declared himself innocent of all charges. He is quoted as saying that the companies he dealt with such as the investment group G111 Accumulation Trust (part of Deutsche Bank) were culpable and ‘had the expertise’ to ‘conduct due diligence’ prior to buying ownership risks.

More Information

See the New York Times article on Life Settlement Securitization here

photo credit: VoisineN

Having your own business can be a complex series of ups and downs and provide you with a wide range of emotional situations. This becomes even more of a dynamic when you have a partner in the business. You have to be aware of what would happen if one of the key members of your staff (including you or your partner) were taken out of the picture.

Key person life insurance can provide coverage that will ensure protection for any business, regardless of size or complexity. Taking away key personnel from a small business can be every bit as devastating as a large corporation losing lead persons. Having a key person life insurance policy in place will allow for an infusion of cash in the event that the key person, covered under the policy, dies.

With key person coverage, the day-to-day operations of the business will be minimally impacted by the sudden loss of this person’s expertise and experience. The business can then use this money to immediately replace the key person to allow the business to run efficiently again as soon as possible. This makes excellent business sense, especially for those businesses that have stocks and shares and that have to answer to others for even the smallest cost overruns. By losing a key person, many businesses will find it difficult to maintain profit levels while that person is replaced.

Another Reason for Key Person Coverage

Another reason many business partners have key person life insurance in place is so that when they pass on, their shares in the business can either be bought by the other owner or passed on to their heirs. In this way, your heirs will not have to participate in a business that may or may not welcome their participation. A key person life insurance policy will make sure that there are funds in the company to allow for buying out partner shares in the business, if necessary or desired.

photo credit: “T” altered art