Will Your Insurance Company Be Able to Pay if You Need Them To?
When you purchase an insurance policy, how much time do you put into thinking about the financial stability of that company?
In other words, do you think at all about whether they will be able to pay your claim in the future, if needed?
I discuss just that point, and what you need to do, in this video.
Will Your Insurance Company Be Able to Pay if You Need Them To?
Will Your Insurance Company Be Able to Pay Checklist – 80/20 Planning
Go get the latest financial report and analyze the financial position of the insurance company. Analyze the balance sheet (equity to assets) and the operating statement (income and expenses).
Furthermore, look at the overall portfolio of the insurance company’s general account. Basically, what backs your policy? Government bonds or junk bonds?
How about the history of your company? Have they ever been in financial trouble? Have they ever had to raise rates on policyowners?
This list of questions is not exhaustive. But the truth is, few have made it this far in their research. Most just trust the company (or worse, the agent).
It’s time to be smarter than that.
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Links referenced in the video:
Links cited in this video:
Fidelity’s list of current annuity rates (a/o 5/2/16)
https://www.fidelity.com/annuities/deferred-fixed-annuities/overview
Michael Kitces blog on Hancock’s Participating LTC Policy (Hey Michael!)
https://www.kitces.com/blog/performance-ltc-from-john-hancock-the-first-participating-long-term-care-insurance-policy/
NAIC definition of mutual insurance co vs stock insurance company
http://www.naic.org/capital_markets_archive/150428.htm
Seeking Alpha Trascript of American Equity Life’s earnings call:
http://seekingalpha.com/article/3969197-american-equity-investment-life-holdings-ael-ceo-john-matovina-q1-2016-results-earnings-call?part=single
Investopedia definition of credit ratings on insurers
http://www.investopedia.com/terms/i/insurance-company-credit-rating.asp
Guardian Life Insurance Company 2015 Financial Highlights
https://www.guardianlife.com/about-guardian/financial-highlights
AARP blog on long term care cost increases:
http://blog.aarp.org/2015/04/07/revisiting-long-term-care-insurance/
Note:
My articles and videos are meant to be educational and not specific advice. I assume my readers are big boys/girls and understand that, but in today’s climate I have to tell everyone again anyways – people might do something dumb and go hurt themselves! (like stick a fork in an electric socket or something – don’t do that!). Consult a qualified advisor before attempting financial strategies that you don’t fully understand.
