Works

  • Actuaries can do lots of things.
    • We can provide the field with a clear description of the policy and how it works.

—  Bruce E. Booker, Life of Virginia, a member of the American Council of Life Insurance (ACLI) Task Force on Cost Disclosure and the National Association of Insurance Commissioners (NAIC) Advisory Group on Illustrations

1993 – SOA – Sales Illustrations – We Can’t Life With Them, But We Can’t Live Without Them!, Society of Actuaries – 20p

  • Until the buyer understands how the product works, attempts to compare price are essentially meaningless.

1972 – SOA – Life Insurance and the Buyer, by Anna Rappaport, Society of Actuaries – 2p-Article

  • I’d like to stress that agents don’t pretend to know the answers.
  • It is our intent to ask for your help because we’re currently living with problems that lack solutions.

—  Robert Nelson, Chairperson of the National Association of Life Underwriters (NALU) Task Force on Illustrations – [Bonk: Currently NAIFA]

1993 – SOA – Sales Illustrations – We Can’t Life With Them, But We Can’t Live Without Them!, Society of Actuaries – 28p

  • (p33) And, Mr. Chairman, as they say in baseball-and I understand you have an interest in baseball these days-you cannot tell the players without a scorecard?
    • Well, it is far too easy for consumers these days to lose track of balls and strikes on how their insurance product works for them, and that is leading to the type of problems we have heard about this morning.

—  NAIC – Statement of David J. Lyons, Commissioner, Iowa Insurance Department, And Chairman, Disclosure Task Force, National Association of Insurance Commissioners

1993 0525 – GOV (Senate) – When Will Policyholders Be Given The Truth About Life Insurance?, Howard Metzenbaum (D-OH)  —  [BonkNote]

  • Walter Miller, vice president of the Prudential Insurance Company of America, said: “Illustrations are not predictions.
    • But they are better than no illustration at all in explaining how policies work.”

1993 1030 – NYT – Insurance; Confusion Over Policies Leads to Talk of Change, by Leonard Sloane – [link]

1978-GOV-Moss-WI-LIBG-grid-p619
  •  (p9) – Thomas Tew, Lawyer – a Joint-agency investigation into certain sales practices of Metropolitan Life Insurance Company.
    • In closing, Madam Chairwoman, I hope that the future and the legacy of the Met will be that two concepts come into the world of insurance compliance, the concept of suitability and the concept of disclosure.
      • It is shocking in the 1990’s that a person who hands a mutual fund salesman a $100 bill gets a complete disclosure of the sales charge, the commission, who the players are, what the investment objective of that fund is…
      • …and yet that same person giving $100 to an insurance agent to buy an annuity product or a whole life product learns absolutely nothing about the internal workings of that product.  

1994 0528 and 0929 – GOV (House) – Deceptive Practices in the Sale of Life Insurance, Cardiss Collins (D-IL)  —  [BonkNote]

  • The fact that we charge people fees that we have disclosed and that fees reduce the value of your policy, and if your policy keeps reducing in value, it will lapse, is not a fraud.
    • That’s common sense.
    • That’s how life insurance works.  (p171) 

—  Closing Argument by Mr. Martens, Defendant Attorney – LSW

2014 0425 – DOC 813 – Trial Transcript – Day 12 – Walker v LSW – 224p

2010s – LC – Walker vs. LSW – Life Insurance Company of the Southwest  —  [BonkNote]

  • In addition, the insurance buyer can learn more about how the policy benefits may vary by reviewing alternate illustrations that project high and low interest rates.
    • Though not exact and not guaranteed, these projections are of value to the insurance buyer because they demonstrate how the life insurance policy works.

—  Prepared Statement of Brian S. Brown on Behalf of the American Society of CLU & ChFC

1993 0525 – GOV (Senate) – When Will Policyholders Be Given The Truth About Life Insurance?, Howard Metzenbaum (D-OH)  —  [BonkNote]

  • (p17) – John Huff, NAIC / Missouri Insurance Commissioner
    • I agree with your conclusion that insurance is not included in the agency’s jurisdiction. 
    • And to be fair to insurers, not all of those queries are complaints.
      • They are really an opportunity for us to have an education process.
      • Many times, they are more inquiries of how a product works, what did I buy?

2011 0728 and 1025 – GOV (House) – Insurance Oversight: Policy Implications for U.S. Consumers, Businesses and Jobs – Part 1 (2011 0728), Part 2 (2011 1025) – [PDF-285p, VIDEO-?] 

  • The ACLI’s Dolan says the size of the premium depends on the returns on the options in the policy.
    • “The fact is, in a different (and better) economic environment, less in premiums would be paid than originally planned,” he notes.
    • “Owners of this product must be aware of exactly how it works, because, unlike certain other types of life insurance, IULs have a fluctuating component to them.”
  • 2020 0923 – Forbes – Sounding The Alarm On Indexed Universal Life Insurance, by Ed Leefeldt  —  [BonkNote]  —  [link]
  • It has been aptly stated that it is more important for the policyholder to know what he gets than how it works.
    • In that respect, the life insurance buyer can be compared with the purchaser of a television set; he is more interested in what shows up on the tube than what takes place behind it. 

1976-4, NAIC Proc.

  • 199x – GOV – similar to 1973 LIBG Example – Television?
  • Commissioner David Lyons (Iowa) asked Ms. Faucett to describe the quotation by her that had recently appeared in the New York Times.
    • She said she was quoted as saying that if you put 10 actuaries in a room you would get 40 conclusions about what the numbers they were examining meant. 
    • She thought it was important for buyers to see how the policy would work but the current approach of the working group would not allow that to happen.
    • Ms. Faucet responded that people spend more time buying a microwave than they do an insurance policy.
    • [Bonk: Ms. Faucett = Judy Faucett, Actuarial Consultant to the NAIC] 

1994-1, NAIC Proceedings