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• Jane Bryant Quinn's Smart and Simple Financial Strategies
  for Busy People (Simon & Schuster, 2006)
  
  Jane Bryant Quinn has written a very wise book. Most financial
  products are junk. Most financial advice is bad. Yes indeed. This
  book merits uncomplicated praise: Buy it.

• World's shortest list: Financial reporters and fee-only financial
  advisers who think that having variable annuities in qualified
  retirement plans is a good idea.

  Variable annuities are tax-deferred. Qualified retirement plans (IRAs,
  401(k)s, 403(b)s) are tax-deferred. Most variable annuity sales are
  within qualified retirement plans. Who thinks that this makes sense?
  The people who sell annuities. Anyone else? Hmmm. You can read
  what the critics say at www.insurancelaw.com/bib-qualified-annuities.htm.
  You can read what the annuity sellers say at www.navanet.org. (5-27-02)

• Great news for variable life insurance buyers

  Ernst & Young has come up with an interpretation of New York's
  nonforfeiture law that allows life insurers to increase the renewal-year
  surrender charges. Details are in the August 2001 issue of Product
  Development News (www.soa.org). This is just one small step toward
  the ultimate goal of a high-commission policy with no death benefit or
  cash value. Query: Do Ernst & Young's Personal Financial Counseling
  professionals tell their clients that renewal-year surrender charges are
  a good thing? (8-15-01)

• Logic, tortured by AALU, is near death.

  The 5-15-00 National Underwriter reports that the Association
  for Advanced Life Underwriting, an organization of successful
  agents, says that a repeal of estate taxes wouldn't be good for the
  agents' clients. You see, if the estate tax gets repealed without a
  guarantee that it won't be reinstated in the future, and people become
  uninsurable in the interim, they won't be able to get the life insurance
  that they'll need to provide funding for the new estate tax. And that's
  why it's better to have just a modest reform. And this position "is not
  self-serving," one AALU member said.

  Repealing the estate tax would also be bad because it would make
  the rich richer, whereas selling tons of life insurance to the rich is
  supposed to make them richer, too, but in a good way.

  The AALU expressed no opinion on whether its members should
  stop selling variable annuities until there is a guarantee that income
  tax rates will not rise in the future. (5-21-00)

  Two AXA Financial executives repeated the AALU line at a
  May 23-24 conference sponsored by A.M. Best and Lehman
  Brothers. Their premise is that people will drop their policies
  because the need to pay estate tax will disappear. But life
  insurance can also be a good investment for beneficiaries,
  because the death benefits are income-tax-free. So their
  argument implies that agents did a poor job of planning for
  the multiple goals that clients might have. (5-25-00)

• New product: Ameritas's Low-Load Survivorship VUL

  This is the first low-load second-to-die variable universal life
  policy that is available to the general public. No surrender
  charge. High early cash values. 14 variable funds and a fixed
  account. Minimum face amount: $100,000. Issue age: 20 to 90
  (age 85 for youngest insured). People who are looking for a
  second-to-die policy should put this on their short list. (10/21/99)

• American Express has another deal for me.

  They're back. Now they want to sell me a Privileged Assets deferred
  annuity with a current interest rate of 6.3% (including a 1% first-year
  bonus) and a surrender charge that starts at 9% and lasts for 10 years.
  
  Hmmm. TIAA-CREF's Personal Annuity Select will pay me 6.25%,
  with no surrender charge. And that's not a teaser rate.  (10/14/99)

• New product: TIAA-CREF's Personal Annuity Select

  This is available to the general public, not just the educational
  community. It features exceptionally low expenses, no surrender
  charge, a return-of-premium guaranteed minimum death benefit,
  and a fixed account with a very competitive rate. There are five
  variable subaccounts. People who are looking for a variable
  annuity or a fixed annuity should put this product on their short list.
  (9/14/99, updated 4/4/00)

• GE Rewards cardmembers receive gooey cards and
  become servants of First USA Bank, N.A. 

  Without explanation, GE Rewards credit card accounts were
  recently transferred to First USA. New account numbers were
  assigned, so cardmembers have to contact every vendor to
  update the information for monthly recurring charges. Also, the
  activation sticker leaves a gooey residue on the new card.

  Some social thinkers have observed that many businesses have
  no respect for their customers' time and that this will create
  opportunities for businesspeople who grasp this simple truth. (7/26/99)

  Fourteen months later...Wasting customers' time is the cover story
  of the October 16, 2000 issue of Forbes. Hurray.

• Belth launches "the disclosure project"

  Joseph M. Belth, the award-winning editor of The Insurance
  Forum, is offering to help consumers obtain performance
  information about their cash value life insurance policies. This
  is the latest step in Professor Belth's decades-old campaign
  for a system of rigorous price disclosure. To participate, write to:
  
  The Insurance Forum, Inc.
  Attn: The Disclosure Project
  P.O. Box 245
  Ellettsville, IN 47429-0245

  Include this information: your name, address, phone number,
  date of birth, and the name of each insurance company that
  issued a policy that you own. Professor Belth will ask you for
  more information and will then send you a request form that you
  can forward to each insurer.
  
  For more information, see "Deceptive Practices and the Establishment
  of IMSA" in the August 1999 issue of The Insurance Forum. To
  obtain the article, call 812-876-6502. (7/20/99)

• Good news for occasional cigar smokers

  It appears that smoking one cigar will not cause you to test
  positive for nicotine on a life insurance medical exam, even if
  you smoke it right before the exam. That's good news because
  smokers pay a lot more for life insurance than non-smokers do,
  so it would be the most expensive cigar you ever smoked. The
  bad news: If you test positive and try to blame it on one cigar,
  the insurance company will know that you're lying.  Source:
  On the Risk, March 1999.  (4/28/99)

• New product: USAA's Variable Universal Life

  USAA has re-entered the VUL marketplace with a new low-load
  product (its first low-load VUL product was discontinued in the late
  1980s). This product features a combination of actively-managed
  funds and three index funds (S&P 500, small cap, EAFE). There
  is a 10-year declining surrender charge. People who are looking for
  a VUL policy should put USAA on their short list.  (11/9/98)

• Are life insurance commissions too high?

  That's one of the questions discussed in SRI Consulting's new
  study, Compensating Life Insurance Sales Representatives.
  The answer will not surprise fee-only consultants.  (10/7/98)

• New product: Lincoln National's eAnnuity

  The eAnnuity is a low-load variable annuity that is sold entirely
  online. Strengths: low asset-based charges (0.55% + subaccount
  expenses), no contract charge, multiple managers, online account
  access. Weaknesses: surrender charge (3,2,1,0%), no guaranteed
  minimum death benefit, no fixed account.  (10/4/98)

  Seven new funds, including two index funds, have been added,
  bringing the total number of funds to 21.  (5/20/99)

• An important Cardmember benefit?

  American Express has a deal for me. I'm eligible to invest my money
  in a Privileged Assets deferred annuity. During the first year, I'll get
  a 5.5% interest rate, which includes a 1% bonus. That's "one of the
  most attractive annuity rates offered anywhere in the nation," according
  to American Express. There's also an 8% surrender charge, which
  gradually disappears by the ninth year.
  
  Hmmm. According to a recent Tillinghast/Towers Perrin survey of
  220 flexible-premium deferred annuities, 5.5% is just barely above
  the median rate. And Ameritas Life Insurance Corp. offers a
  low-load variable annuity with no surrender charge and a fixed
  account that is currently paying 5.5% (and that's a base rate, without
  a gimmicky one-time bonus). There are other low-load products with
  similar features.  (10/1/98)

• What do legislation, sausages, and ratings have in common?

  There's a well-known saying that you don't want to watch legislation
  and sausages being made. After reading "Moody's Blues" in the
  August 13, 1998 issue of Far Eastern Economic Review, you might
  feel the same way about ratings. Although this article is about ratings
  of Southeast Asian debt, it also offers insight into the process of
  coming up with life insurance company financial strength ratings.

• People overestimate insurer profits

  According to the Insurance Research Council, claims costs for
  automobile and homeowners insurance are about twice what people
  think they are. The IRC is supported by the property-casualty
  industry, so it would be nice to know if the Consumer Federation
  of America agrees with the results, but it's something to think
  about the next time you pay your premium.

 

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