The Estate Tax is set for a nasty reset come the end of this year if Congress does not act to extend current legislation, or create new. We've steered clear of political discussions on the Insurance Pro Blog, and we still intend to do that. Today's discussion will attempt to be as objective on the topic as possible, and bring our perspective to the table about what a regression to a $1 million dollar exemption and a 55% top marginal rate will mean to you.
Life Insurance
Universal Life Insurance-From Pure Evil to Absolute Truth
First, I feel like I should explain what I mean when I sub-titled this post a “view evolved from evil to truth”. It really goes back more than a decade when I was first “quietly” recruited and subsequently “trained” by one of the big Blue mutual insurers.
Keep in mind in those early days of my life insurance career, the only thing I knew was that there were basically three types of life insurance available—term life, whole life, and universal life insurance. And I only knew that because I’d endured the pre-licensing classes and passed the licensing exam.
BREAKING NEWS: Prudential Financial Halts Contributions to Popular Variable Annuity Contracts
In a world that has seen more and more hurried announcements of product closures, Prudential Financial made a quick announcement at the end of August that it was stopping future contributions to it's Highest Daily Daily Lifetime 5, Six Plus, Seven, and Seven Plus contracts.
Modified Endowment Contract: Pro Blog Style
Modified Endowment Contract is frequently known as a condition where an insurance contract becomes “paid up” within 7 years. That's an okay understanding of a basic principle (it served me well for about 6 months and insured I didn't do anything really stupid when I was armed and dangerous as a new agent), but there's more to MEC's than just not making it paid up within 7 years.
What Northwestern Mutual’s Latest Conspicuous Investment Adds to the Cash Value Life Insurance Discussion
Northwestern Mutual is a large mutual life insurer well known for it's financial stability and smug career agency sales force. Another thing the “Quiet Company” is somewhat well known for within the industry is its not so quiet approach to brandishing about its latest investment moves.
A few weeks ago we learned that Northwestern now includes a $142.5 million dollar loan to Douglas Emmett, Inc. for its latest project: the Warner Center Towers.
On its face this may not seem like such a big deal. It's certainly not a huge investment on the behalf of Northwestern. $142.5 represents about a 10th of one percent of Northwestern Mutual's total general account. But one thing to be gleaned from this news is the diversity of investment exposure your money has when it sits in an insurance company's general account.
These sorts of investments are pretty typical for most insurance companies. In fact, one of the most astute comments I've ever heard from a fellow agent was, “These companies tend to run mini private equity firms inside a portion of their general account.”
Northwestern Mutual Poll reveals that Americans like life insurance
Now don't get too excited, I didn't say that Americans like life insurance “agents.”
If you’ve ever been in the life insurance industry or are currently in the industry there’s no doubt you’ve taken jabs about being a life insurance agent.
Some polling data I saw years ago placed life insurance agents among the least “respected” professions in the country—only being edged out by used car sales people and personal injury attorneys if I remember correctly.
Direct Recognition vs. Non Direct Recognition
The debate between direct recognition and non-direct recognition is a long-standing one. Be sure to review both of our earlier posts on these topics for more in-depth explanations.
So, which is the superior method of treating dividends when there’s an outstanding policy loan?
Are the “purests” correct when they point to non-direct recognition as the only way a company should approach whole life policy loans?
Or, does direct recognition have an advantage by “not subsidizing the policies with loans with the ones without them” as the companies that issue direct recognition contracts are quick to point out?
Whole Life Dividends: Direct Recognition
Picking up from where we left off last time on whole life dividends, direct recognition is the opposite strategy to non-direct recognition.
It’s the newer approach to handling the payment of dividends when a policy loan is outstanding, and it’s frequently championed as the feature that allows life insurers to pay higher dividends on non-collaterally assigned policy values (hereinafter, “non-loaned policy values” because its slightly shorter and how we generally refer to it).
Whole Life Dividends: Non Direct Recognition
In the interest in filling in some obvious knowledge gaps, we figured we’d do a quick piece on non-direct recognition. In fact, we’ve decided to do a series on dividend recognition this month. Hopefully, this will satisfy anyone who wandered upon our whole life dividend piece and walked away without a confident understanding of the concept.
September is Life Insurance Awareness Month
It’s September, well almost anyway, so you know what that means? Yep, it’s life insurance awareness month again.
We know that today is technically August 31st for all you obsessed with details, but we’re assuming that most of us will be enjoying the last hoorah of summer this weekend–which means we probably won’t be thinking about life insurance.
