Outline

  • 2006 02 - Westlaw - Could Abuses in the Life Insurance Industry Lead to Penalties?, by Jeffrey A. Baskies - 5p
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  • Principal-Agent
    • 1991- LC - Ferguson vs Crown and Casteel
    • 2019 0712 - Joseph Belth - No. 322: Pamela Yellen—Her Unbelievable "Bank-on-Yourself" Wealth-Building Strategy
      • Text of July 2 Email from Planck to Belth
        • Lafayette Life's products are sold through independent agents and independent marketing organizations.
          • Our role is limited to providing life insurance policies and annuity contracts.
          • We do not endorse or sponsor any selling system nor do we develop, advertise or promote the marketing content or materials for any selling system.
          • We do not inquire about, attempt to determine, or identify in our systems whether any independent agents appointed to sell our products are users of any specific selling system.
        • Please be assured that Lafayette Life makes it clear through our contracts with those selling our products and disclosures to our customers that our life insurance policies and annuity contracts are insurance products.
      • General Observations - [Joseph Belth]
        • Lafayette Life appears to take no interest in or responsibility for the methods used by the independent agents who sell its policies.
        • Further, I think the same can be said about many if not all other companies that sell their policies through independent agents.
        • In my opinion, this is a matter of serious concern, for two reasons.
          • First, sales methods may be deceptive, misleading, or otherwise unfair to consumers.
          • Second, companies and state insurance regulators may find it difficult to police the sales methods used in the field by independent agents.
  • Illustrations
    • 1989 - SOA - Illustration Wars, Society of Actuaries - 14p
  • Life Insurance as Investment / IRA / Savings
    • 2005 1117 - GOV (Senate) - A Review of the GAO Report on the Sale of Financial Products to Military Personnel, Richard Shelby (R-AL)  ---  [BonkNote]
      • (p18) - GAO - Richard J. Hillman - But oftentimes what regulators are telling us is, that these insurance products that are being sold to military members are being not sold as an insurance product, but are being sold as an investment. 
      • (p20) - Wayne Allard (R-CO)
        • Same types of stuff we run into in the private sector.
        • We ran into them in the 1970’s particularly, if I recall, although they just had them as IRA accounts at that time, and they are deceptive.
          • The salesman persisted that this was not life insurance, but it was there in black and white if you read the fine print.
        • I can understand how they can get misled on that kind of stuff, and I think that it is a shame. 
  • IUL's - LIRPs - Investment
    • 2012 May/June - NAFA - 4 Reasons Why Indexed Universal Life is Ideal for Younger Clients, By Robert Billingham - p31-32 - 68p
    • 2023 0828 - The Power of Zero - David McKnight - The Truth About Doug Andrew and His Retirement Philosophy - [VIDEO-YouTube-10:21]
      • I admire him, he has done more to bring to light the benefits of the Life Insurance Benefit Plan than just about anyone on the planet.
      • Differences between Doug Andrew and David McKnight
      • Roll out vs roll over - 401ks, IRAs
        • Stock Market
          • DA - Anti-Stock Market
          • DM - Not Anti-Stock Market
      • DA - Laser Fund = IUL
      • Doug says to roll all your 401ks and IRAs into a IUL
        • DM - I disagree
      • 4% rule, stock market accounts, IUL account, 
      • 9 - Doug is a pioneer in this industry. Done more to expose the benefits of Indexed Universal Life than anyone on the planet.
        • However.... IUL only one thing to use
    • 2023 10 - FSRA - Report - Observed Practices in the Distribution and Sale of Universal Life Insurance  ---  [BonkNote]  ---  15p
      • (p3) - In the majority of instances, a Universal Life (UL) Insurance policy was sold. UL is a unique and complex insurance product often designed for individuals to meet very specific goals.
        • When such policies are sold to consumers for whom the product is not a good fit, there is a significant risk of poor outcomes.
        • In fact, the review revealed several troubling patterns involving the fair treatment of customers as it relates to the sale of UL. These instances may be leading to poor consumer outcomes.
      • Notably, 80 percent of the files did not demonstrate that UL policies sold were aligned with the customers’ needs or circumstances.
      • The review uncovered several common concerning themes related to the sale of UL. These included:
        • no specific life insurance need identified, or a trivial needs analysis;
        • boilerplate recommendations;
        • incomplete or inaccurate retirement planning advice; 
        • unrealistic and/or misleading policy illustrations.
  • Lapses
  • Legal Cases
    • Ferguson vs Crown and Casteel
      • MP3
    • Johnston and Johnston vs Conseco
      • MP3
    • MDL's -
      • Companies - We would not have lost. Settled
        • Sun Life Assurance of Canada - 
        • Prudential 
    • 2021 Spring - ABA-Litigation - Demonstrative Evidence: Tell and Show, by Jennifer L. Keller and Chase A. Scolnick, American Bar Association, VOL. 47 NO. 3 - p43-48 - 68p
      • (p44) - Trial counsel used the following graphic in a bellwether trial challenging an insurer's products:

      • The plaintiffs had purchased low-cost term life policies but demanded benefits provided only with more expensive insurance products. The defendant's counsel explained to the jury that those plaintiffs shouldn't get something for which they hadn't paid. Because the jurors weren't familiar with the differences among various life insurance products, counsel analogized the types of policies to automobiles.
      • The graphic likened the plaintiffs term policy to a Toyota Corolla and a more expensive whole life policy to a Mercedes Benz. The images were immediately recognizable, resonated with the jurors, and attacked the plaintiffs' argument. Even jurors unfamiliar with life insurance policies understood the argument that it was unfair and unreasonable for those plaintiffs to expect "a Mercedes" when they paid for "a Corolla" instead.
  • Media
    • 1978 0406 - NYT - $1.9 Million Payment Ordered in Libel Case - [link]
      • A judge has ordered The Twin Falls Times News to pay $1.9 million in libel damages after it refused to disclose its sources for articles that an insurance company said ruined its business.
    • 1981 0511 - Ventura County Star / NYT - 'Universal' insurance making gains - newspapers.com/article/ventura-county-star/146622810/
      • The Life Insurance Co. of California was the first to sell the universal policies, in January 1979. Its name later was changed to Hutton Life.
    • 1989 0501 - National Press Club - Where Was the Press During the S&L Crisis? - [VIDEO-CSPAN]
    • 1994 0206 - Newsweek - Here They Go Again, by Jane Bryant Quinn - [link]
    • 1997 1024 - WSJ - MONY Wins Dismissal of Suit Over 'Vanishing Premium' Policies, by Leslie Scism - [link]
      • The company, popularly known as MONY, won a dismissal this week of a national class-action lawsuit that is similar to more than 30 suits pending against major life insurers.
      • ... in the MONY case, New York state judge Beatrice Shainswit found that..
        • while thousands of consumers nationally "have been deeply aggrieved by what they perceive to be a grave injustice perpetrated upon them by the numerous insurance companies who contrived, and profited, from the "vanishing premium" concept," this "ill-conceived product" doesn't necessarily "equate to fraud, or any other actionable wrongdoing, which can be compensated for in a court of law."
        • Her 29-page decision debunks key arguments in almost all of the suits. - <WishList = "29-page decision">
          • She said insurance agents don't have a fiduciary relationship with their clients, as plaintiffs' lawyers contend.
          • She also maintained that sales documents stating that dividends aren't guaranteed at high levels were sufficient warning to consumers that they couldn't rely on other promotional literature showing rosy dividend scenarios.
      • [ACLI] - "This case, being typical of many other baseless class actions, will be cited as authority in other jurisdictions for dismissing those frivolous cases," predicted Phillip Stano, senior counsel for the American Council of Life Insurance, a trade group in Washington. "And we congratulate MONY for standing up to those who sought to intimidate them into a frivolous settlement."
    • 2018 0919 - WSJ - Universal Life Insurance, a 1980s Sensation, Has Backfired: A long decline in interest rates caused premiums to soar when they were supposed to stay level, by Leslie Scism - [link]
    • 2020 0107 - WSJ - It’s the Hottest Thing in Life Insurance. Are Buyers Aware of the Risks? Regulators worry insurers are underplaying the dangers of a product tied to the performance of the U.S. stock market, by Leslie Scism - [link]
      • One concern is that existing consumer materials “can lead to unrealistic expectations,” said Fred Andersen, an actuary with the Minnesota Department of Insurance who is a leader in the effort at the National Association of Insurance Commissioners.
      • Paul Graham, chief actuary with trade group American Council of Life Insurers, said the industry supports development of materials and disclosures that help consumers “make the right decisions,” though “we do have different views amongst our companies as to how to best accomplish that on rather complex IUL products.”
      • Some regulators and advisers fear indexed universal life will offer a repeat of what many consumers experienced with a policy known as basic universal life.
        • Those policies were a sensation in the 1980s when U.S. interest rates were in double digits.
  • NAIC
    • 2019 0917 - NAIC - LIIIWG - Life Insurance Illustrations Issues Working Group - Proceedings (Fall, 6-77) - Cost of Insurance (COI) ---  [BonkNote]