Life Insurance Listed

Remember when you signed up for that credit card over the phone? Remember the telemarketer asking you if you’d like to have payment protection insurance for your account? Remember when they said it would only be a nominal fee, but protects you if, for whatever reason you don’t have the ability to pay your monthly bill? I’m guessing your answer is “no” to all of the above questions. Nonetheless, thousands of americans have signed  up for this service and are paying a ridiculous premium on insurance they most likely don’t need. Be sure to examine your monthly credit card statement in detail to ensure that there’s not any unknown monthly charges and specifically look for an insurance charge related to payment protection. For more information check out this article from TheStar.com.

In the world of entertainment and pop culture, a $10 million life insurance policy that was active at the time of the actor’s death has yet to be paid out. With ReliaStar, the policy’s underwriter, stalling for time to ‘investigate’ the circumstances of the Mr. Ledger’s death, concern has been mounting that the company has no intention of honoring the policy. As such, laywer’s representing Ledger’s daughter’s estate have filed a lawsuit seeking the policy’s payout.

Source: Wired Magazine

With the recent market turmoil and specifically, the huge government bailiout of insurance giant AIG, some policyholders may be solicited to change policies. Beware of any solicitation to replace these policies for a few reasons:

1. AIG insurance companies remain solid entities and your policies are not in jeopardy. When considering replacing these policies treat them as you would have before the government intervention.
2. Switching policies can often cost you money. Cancellation of a policy can have hidden costs and significant tax consequences to you. Before undertaking any switch be sure to have a conversation with your financial adviser and/or CPA to completely understand the consequences of moving your policy elsewhere.

For a detailed, government-sponsored response to this issue check out this release from the State of Ohio this week.

Ugh. This is a terrible story about two older ladies insuring homeless men with term life insurance, then killing them and collecting over $2.8 Million in insurance payouts.

Click Here to Read the Article

Stories like this aren’t new to the insurance industry. But typically these situations are prevented by the life insurance companies themselves by ensuring that policy holders have an “insurable interest” in the insured. This is typically restricted to close family members or business partners, and it’s put in place to avoid situations exactly like these. It’s unclear from the article how these women got around that requirement, but in providing these life insurance policies the Insurance Companies may be liable in these murders as well. The landmark case that set precedent for this association was Liberty National Life v. Weldon, 267 Ala.171 (1957). It’ll be interesting to see if a case is made for implicating these insurance companies in this terrible story.

While the insurance industry itself dates back to 5,000 BC, life insurance as a concept came along much later during the times of the Roman Empire. The first recorded life insurance policies were used to cover proper burial ceremonies for Romans: Soldiers and citizens would pay into a common burial fund over time, and upon death the fund would pay for proper burial services for the involved individual. These “burial clubs“, as they were called, eventually transformed into also paying out some regular sum to the deceased’s family, a service that very much resembles term life insurance products that are available today.

Life insurance first appeared in the United States late in the 1700s in the form of religious groups who used insurance to protect the families of ministers should the minister pass away. While a few organized efforts around life insurance were started in the 18th century, it wasn’t until the second half of the 1800s and after the civil war that life insurance became a prevalent service available to and used by americans. Further regulation and innovation in the industry throughout the 20th century turned life insurance into gigantic industry that it is today.

The intention of this blog is to, over time, educate on the insurance industry, its practices and products. Our hope is to create more educated, informed consumers to best take advantage of products available from the insurance industry.