More Questions for Life Actuaries

and the few honest companies that sell little because they invest so little in marketing

You've just described a stoopid company, not an honest one.

UL is an investment/savings product whether you want it to be or not. To claim it is uncomparable is simply to stick your head in the sand.

UL is an insurance product whether you want it to be or not. It will pay $1,000,000 in death benefit after paying a $1000 premium, if you died right after paying the premium. The fact that it has a tax sheltered investment component that can help pay for future premiums is a great bonus for the consumer. If it's not for you, don't buy it.

No one really HELPED me. 1. Because I knew many of the answers already.

Black Flag trolls with more finesse than this.

I don't know what your problem is with the industry. But you've clearly forgotten, or never understood, the point behind what we're doing. Every day some 25 year old widow with two kids is given a check that will put her kids through college. Because some agent kept his foot in the door to sell some product priced by the same people you are slamming. I've seen tape on widows who DIDN'T get the check, and it's not pretty. Do you think when they get the DB that they're trying to figure out if they had the right type of policy? Or maybe that their premium was determined by some satan worshipping actuary?

And I don't know where you're experience has been, but everything I've seen in over 15 years is that bloated perm doesn't get sold very much anymore, and that the market place is very competitive. You'd do better worrying about the why Canadians can buy American built cars 30% cheaper than Americans, than trying to find worms in the life industry.

[openminded]

...

[nbd]

Here is my reaction to plastic man.

Life actuaries are not evil. We are balancing among profitability, solvency, compliance, market demand, and distribution demand. It is delicate balance that we need to keep in order to make eveyone happy (shareholder, regulator, policyholder, distribution).

If one think the distribution cost is too high? I challenge you to run a low distribution cost company at the current level of pricing. You will make fortune. Nobody has accomplished that. (Maybe an exception of Shane at AnnuityNet)

If you think that no insurance company is trying to reduce its distribution cost, you are wrong. Distribution is always changing and improving. Efficiency is the key to success for the distribution. Let the free market handle the efficiency If one has too much profit, there will be new players to compete. If one makes too little profit, bankruptcy will take care of it.

ALL of these argumanets are very lame and jesuitical and do not address the points of fact I've made. Lapse rates ARE twice as high as they were 50 years ago. The perm life industry IS mocked, derided, scorned, berated, etc. by fee only financial advisors. The life industry HAS lost its place as intermediary of choice. The life industry needs new leadership from people outside it.

Of course it tries to minimize distribution costs, but as you well know one may spend too little on distribution. My claim is that the whole SOLD not BOUHGT paradigm needs to change and it can only change if other finacial sector executives take over. ANY product that is sold and not bought is a bad product. Economists call it bad agency and supplier induced demand.

Far from beutiful the widow example IS disgusting and evil. THE LAST THING ON HER MIND AT THE TRAGEDY THAT HAS BEFALLEN HER IS MONEY (if she has any decency whatsoever). ALSO YOU PROBABLY DON"T KNOW THAT AT ITS INTRODUCTION IN ENGLAND LIFE INSURANCE WAS UNIFORMLY CONDEMNED FROM THE PULPIT AND IS STILL ILLEGAL IN MANY MUSLIM COUNTRIES TO THIS DAY. WHY IS THAT? Precisely for the reason given above, a human life cannot be measured in the present value of lost future earning power. Whatever the want that ensues on the death of a breadwinner money can never be consolation and that widow would give up anything to have her husband back. Furthermore, destitution is rarely the result of a breadwinner's death. Women can work now, they can remarry, and the hardship imposed by their husbands death is often no worse than the hardship imposed by divorce. Your example is equally UNFACTUAL. The life industry pays out TWICE as much in surrender values as it pays to beneficiaries. The rest of the first world gets along fine with term only. You are the scum of the earth.

The argument that perm is the only way to reach maximum distribution because only its higher premiums can pay the distribution costs is an AMORAL, IMMORAL, and EVIL argument. It is in essence saying: it is fine to steal from and lie to people as long as it is for their own good as you have decided---TRULY EVIL.

It CANNOT be overstated that I am not alone. IN FACT, I am part of the vast majority of Americans who view life agents and companies as the bottom feeders of the business world. The billions you had to pay for churning isn't the last. Trial lawyers are licking their chops at what is still an industry built on deception.

Perm is a life product AND an investment product whether you like it or not. To think these two to be mutually exclusive shows a remarkably unsubtle mind.

And a few semi-honest companies that sell perm:

1. Ameritas
2. TIAA-CREF
3. USAA
4. Most primarily mutual fund companies and brokers (which may or may not underwrite), e.g., Fidelity, Schwab etc., (who know that it isn't 1950 anymore).

It is no surprise that the life actuary has found ways to morally justify his profession. How could he live himself otherwise, unless he were a sociopath? But the justifications for the individual perm market's current organization amounts to a sum of zeros, and however many zeros one adds up the sum is still zero.

TERM, TERM, TERM.

By the way have you seen the millions of older americans who have been churned? Have you seen the millions of perm buyers who surrender realizing they've been had. And have you seen the people whose retirement years will be spent much less enjoyably because they put their money with a life company instead of into an IRA or 401(k)?

Finally, I AM AN ACTUARY.

[Cement Mixer]

cool post trolly friend. i've always wanted an actuary troll friend. maybe we can get together and attack bankers next. they actually charge interest on money they loan you much greater than money you give them, EVIL EVIL EVIL.

can you believe you have to pay for emergancy medical help! the last thing an accident victim is thinking about (if they have any decency) is how they plan on paying. Damn those evil nurses and desk people at the hospital. is because the doctors are scum of the earth. long live trial lawyers who attack these scumbags for the good of us all.

so poo on u life actuaries the world will rise up and crush you. you are evil evil evil and you don't care about people either greedy greedy greedy.

poor week mined fools me and my new friend plasti-actu-troll are gonna expose you to the world. nayh nayh nayh.

com on plasti-actu-troll, i need some help attacking discover card.. they gave me plastic and let me buy more than i can pay back, they are so evil evil evil - maybe i'll call them a life actuary. he he he

Originally Posted by plasticsmakeitpossible

ALL of these argumanets are very lame and jesuitical and do not address the points of fact I've made. Lapse rates ARE twice as high as they were 50 years ago. The perm life industry IS mocked, derided, scorned, berated, etc. by fee only financial advisors. The life industry HAS lost its place as intermediary of choice. The life industry needs new leadership from people outside it.

Of course it's mocked. But you're using an 80's argument. The industry as a whole sells very little perm these days. I've seen numbers from companies showing perm sales going from a majority of sales to just a few percent. And who made fee only financial advisors the shining light of reason in the industry?

Of course it tries to minimize distribution costs, but as you well know one may spend too little on distribution. My claim is that the whole SOLD not BOUHGT paradigm needs to change and it can only change if other finacial sector executives take over. ANY product that is sold and not bought is a bad product. Economists call it bad agency and supplier induced demand.

Wrong again. The reason that the product is sold not bought is due to consumer behavior, not some wicked plan by actuaries or executives.

Far from beutiful the widow example IS disgusting and evil. THE LAST THING ON HER MIND AT THE TRAGEDY THAT HAS BEFALLEN HER IS MONEY (if she has any decency whatsoever).

It's a big thing on her mind if she can't pay for the funeral. As for me, I've got insurance so that my wife doesn't have to worry about money if I die. She gets to maintain her current lifestyle (which has a cost attached). I guess I could save my few dollars a month and tell her that if I die, she better start cruising the funeral procession for another man to look after her.
You mention that destitution is rarely the result of a breadwinners death. YOU are the one that is wrong on this. Talk to any agent that's ever delivered a check for a DB. Again, I've seen people who were seriously screwed as a result of a lack of insurance on the breadwinners part.

ALSO YOU PROBABLY DON"T KNOW THAT AT ITS INTRODUCTION IN ENGLAND LIFE INSURANCE WAS UNIFORMLY CONDEMNED FROM THE PULPIT AND IS STILL ILLEGAL IN MANY MUSLIM COUNTRIES TO THIS DAY. WHY IS THAT?

Don't care. My grandparents weren't even born when England introduced insurance. And I don't believe you were discussing Muslim countries. The local Amish community here doesn't buy insurance either. That doesn't make it an evil product.

Precisely for the reason given above, a human life cannot be measured in the present value of lost future earning power. Whatever the want that ensues on the death of a breadwinner money can never be consolation and that widow would give up anything to have her husband back. Furthermore, destitution is rarely the result of a breadwinner's death. Women can work now, they can remarry, and the hardship imposed by their husbands death is often no worse than the hardship imposed by divorce. Your example is equally UNFACTUAL. The life industry pays out TWICE as much in surrender values as it pays to beneficiaries. The rest of the first world gets along fine with term only.

You're overly emotional, and incorrect once again. A life insurance purchase should be a financial decision, otherwise you have high lapse rates. And you can measure the present value of lost future earning power. Contact me off board for the calculations.

You are the scum of the earth.

Perhaps. But that wasn't on any of the exams we take to become actuaries. It's probably a natural process.

The argument that perm is the only way to reach maximum distribution because only its higher premiums can pay the distribution costs is an AMORAL, IMMORAL, and EVIL argument. It is in essence saying: it is fine to steal from and lie to people as long as it is for their own good as you have decided---TRULY EVIL.

Who made this argument? Nobody here. And don't try to turn this into 'whole life is wrong in all cases'. Once again, you'd be wrong.

It CANNOT be overstated that I am not alone. IN FACT, I am part of the vast majority of Americans who view life agents and companies as the bottom feeders of the business world. The billions you had to pay for churning isn't the last. Trial lawyers are licking their chops at what is still an industry built on deception.

Trial lawyers? Now they are the good guys?

Perm is a life product AND an investment product whether you like it or not. To think these two to be mutually exclusive shows a remarkably unsubtle mind.

But YOU just said they were an investment product, and it seemed pretty clear you were saying that to the exclusion of insurance. Investment isn't the point, insurance is. Nevertheless, sometimes perm and UL type products can be a decent investment product. Doesn't make it bad. Sometimes I drive my volvo like a porshe. It's not a porshe, and I'm not using the product for it's primary and intended purpose. Does that make the designers satan worshippers?

It is no surprise that the life actuary has found ways to morally justify his profession. How could he live himself otherwise, unless he were a sociopath? But the justifications for the individual perm market's current organization amounts to a sum of zeros, and however many zeros one adds up the sum is still zero. TERM, TERM, TERM.

Try running a PV calc for term and a perm or a minimum funded UL. I can find perm and UL products, over a long enough period of time, that have a smaller PV than term. Are you suggesting consumers insurance needs are all temporary? Once again, I offer my assistance with the calcs.

By the way have you seen the millions of older americans who have been churned? Have you seen the millions of perm buyers who surrender realizing they've been had.

Sounds like a sales problem. Contact the NAIC.

And have you seen the people whose retirement years will be spent much less enjoyably because they put their money with a life company instead of into an IRA or 401(k)?

Looks like you're saying either:
a) They didn't die so they got nothing.
b) The agent sold them WL as an investment product. Thus, actuaries are satan worshippers.

Finally, I AM AN ACTUARY.

You've forgotton your basic principles of insurance. I'm not an actuary yet, but I've still got a clear picture that we're protecting against financial loss created by death, as do most here.
You started with a big bru-ha-ha about financials and inner workings of insurance companies, and have degenerated into a whole life slam. Your arguments on this topic are stale, relatively few companies and agents are pushing the evil Wl inappropriately anymore. That went out with hair bands and el caminos, and almost everyone here knows it.

[G. Ringo]

If a life insurance policy is sold with an illustration, regulators require the name of the insured on the application and a diligent effort to secure his signature, so that they can verify that the illustration matches the policy sold. The term rate quotes available to anonymous web surfers are just guaranteed premium rates. A term policy sold with an illustration requires the proposed insured's name and a way to contact him, just like a permanent policy sold with an illustration.

[JMO Fan]

I own two whole life policies. Both are still good deals. An agent/friend of mine sold me the first one. We both got a good deal. And we stayed friends.

I bought the second one between my ASA & FSA. Glad I did. Shopping paid off. :P

Buying permanent is not for everybody. I also own a couple of term policies, for shorter-term needs. But for those with long-term needs, UL seems best now -- or VUL. As always, there are good policies and less-good.

For all of them, I'm grateful for the actuarial profession (and to be a part of it -- as a regulator, for now). I'm also glad that, for the most part, they uphold their professional integrity. The modest, professional, rational reactions in this thread are reflective of that.

[nbd]

Additional comment for plastic man.

I think plastic man hates perm and loves term.

Term life has problems of its own.

High comp. over 100% of FY comp.
High Acquisition cost.

Lapse supported pricing.

Less guarantees due to Reg XXX.

Too many competitions.

Finite amount of reinsurance coverage pools.

I believe that TERM is not a solution to industry's problem.

However, it can be the source of problem due to underpricing.

How can those guys make money at the current rate?

[mayreeh]

Insurance is a good thing whether it is
--car insurance (my aunt was hit by a kid with no insurance and spent 3 weeks in intensive care - she lived, but the insurance company paid the bills, making her life much easier than it would have been without insurance)
-- renters insurance (my apartment got only light smoke damage, but my apartment was unliveable and I would have had to take days off of work while I lived in a hotel and cleaned it up- except that the insurance company paid for the hotel and sent in cleaning crews that cleaned it all up in one day. The bill was over $1000 just for cleaning the smoke off of everything).
-- life insurance (when my dad died, my mom's biggest worry was that she wouldn't be able to continue to live in her house and afford her medication - but his life insurance policy pays the property taxes and the medicare supplement.)
-- health insurance (try getting cancer treatment without it.)

Yes, it can be abused. Hence the illustration laws that are now on the books. (Plus miriad other laws). But you can die from drinking too much water. Anything can be abused.

P.S.

I'm not an expert on this, but I do have a little experience. (An Islamic woman who started work without researching it ahead of time and had to quit because of religious reasons.)

There are a number of reasons why the Islamic religion is againt life insurance but one of the biggest is simply that interest (usury) is a no-no.

There are variations of life insurance in some Muslim countries that operate fully within the bounds of the less strict sects. (They avoid interest and just use a pooling of risk approach.)