Bruce Vanderveen

How Investors Can Lose with Annuities and Whole Life Policies

Scott.
I appreciate your input. I will keep tabs on my mother-in-laws frozen Standard Life of Indiana policy and update here when it is resolved. However, it is a fact that her and the 40,000 other investor/policy holders have had their accounts frozen (see their website at standardlifeofindiana.com) for at least 6 months starting last December. Even though it was the major theme of my article none of my critics seem to want to touch it. Anyone?

You and others may wish to read David Merkel's extensive (8 parts) analysis of AIG's domestic life companies in which he worked for three years. In his summary he says: "Without the help of the US Government, many of them would have failed." Search Seeking Alpha on David Merkel to find it. David has an extensive and lengthy back ground in the insurance and finance, he cannot be easily dismissed as "not knowing Insurance 101".

On May 08 12:54 AM Scott A Olson wrote:

> The misunderstanding, Bruce, is that you think that Genworth, Hartford,
> Allianz, AIG, etc are insurance companies. They are not. They are
> publicly traded financial holding companies that own insurance companies.
> The insurance companies owned by these holding companies are highly
> regulated and solvent.
>
> Quoting the California Insurance Commission regarding AIG last fall:
> "The financial issues all come from the parent company, AIG, and
> not its subsidiary insurance companies."
>
> Kiplinger's had a great article explaining the same thing:
>
> www.kiplinger.com/colu...
>
> "The insurance subsidiaries are solvent and able to pay their obligations,"
> says Sandy Praeger, president of the National Association of Insurance
> Commissioners."
>
> I think the reason that some of the posts seem condescending is because
> one of the first things taught to insurance agents is how the industry
> is regulated and extremely safe and conservative--as it should be.
> Since every insurance agent learns this in "Insurance 101", they
> can be quite shocked when a "personal finance" blogger doesn't even
> know the very basics of the insurance industry.
>
> Please try to understand their condescension.
>
>

How Investors Can Lose with Annuities and Whole Life Policies

Asking life insurance customers "to be careful", as I did, is not "bashing".

AIG stock, in the last 52 weeks, has been off 52 week highs as much as 99%, Genworth as much as 97%, Hartford as much as 95%. Prices are now up, but still down near 80% or more. If you are entrusting your life savings with these companies the least you can do is to be "careful".

On May 06 03:04 PM S Brent Parker wrote:

By the way, the insurance companies
> that you bashed have a long history of paying claims and still remain
> financially sound!

How Investors Can Lose with Annuities and Whole Life Policies

The article's point is annuity buyers, despite industry assurances, CAN be damaged Ask the 40,000 policy holders of Standard LIfe of Indiana. With hundreds of life insurance companies I suspect Standard Life of Indiana is not alone

Would freezing your savings for six months, a year or more, not be damaging to you? How much can/will fiscally strapped states guarantee policies in a multiple failure type environment These questions should not be swept under the rug.

It is irresponsible to take a condescending, "You don't understand. Everything is fine. Don't worry. We know what is best for you." attitude. All too often in this current crisis we have heard that line, usually trumpeted loudest just before failure.

The article is also a plea for more transparency. jimitee makes my point precisely. Why should we have to be "experts" to understand the safety of annuities? We have the internet. How about posting on company websites easily assessable pie charts showing where the investments are. It should be updated on at least a monthly basis?