Do Insurance Companies Sometimes Act In Bad Faith Because Of Their Own Financial Problems?

Everybody should realize that insurance companies make money by investing the money they receve in premiums paid by their insureds. Does anyone think that insurance companies are any better at investing their money than any of the wall street investment banks that made such bad decisions?

Aside from all the press coverage of AIG's problems, the media has basically overlooked the fact that many insurance companies are having significant financial problems. In fact just by a little internet searching, I learned that AIG is not the only insurance company that is requesting Federal bailout money, and that A.M. Best has downgraded its credit ratings of some prominent insurance companies and their coprporate parents (your insurance company may be a subsidiary of a much larger group/holding company).

Over the years we have seen insurer's adjusting claims in indefensible ways when the insurance company is in financial trouble.

One example that sticks in my mind was a small one man roofing contractor, who basically worked out of his home. He had resurfaced a roof on a warehouse. We had several days of torrential rains, and the roof collapsed. The roofing contractor was sued, and he turned the claim in to his liability insurer. The insurer denied the claim on the silly basis that the only roof that the liability policy would cover was the roof on his own office!

We sued the carrier, and forced them to cover the suit and pay the loss, and very shortly after we finished, the insurer went into receivership, and was declared insolvent.

The point is, that whether you are an insured looking to your own insurance company to protect you, or you are a victim making a claim, the reality is you'd better be aware of the insurer's conduct, and pay attention to whether the conduct is because of financial problems the insurer is having outside of your personal situation.

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Insurance Company Financial Problems

I have previously posted about the ongoing and anticipated effects of the current financial crisis on the insurance industry as a whole. Now, it's getting personal.

In 1984, my wife and I purchased Universal Life Insurance on both of our lives with Shenandoah Life Insurance Company. We have faithfully paid the premiums for the policies for the 25 years since that time. In fact, for a period of time we even paid more than the required minimum premium. In my calculation, we have paid at least $50,000 in premiums to them since the inception of the policy.

I just learned that the Virginia Department of Insurance has placed them under supervision. Here is the link to the documents in regard to the receivership.

According to the "Questions and Answers" document, the receivership was necessary due to the declining value of some of the company's investments. In other words, they took premiums from policyholders and invested the premiums, and the investments of those funds didn't pan out.

As I posted earlier, whether you are shopping for insurance, paying for an insurance policy, or making or litigating claims.......be aware of the insurance company's financial status.

Unfortunately for all of us, this ain't nearly over yet, we still can't see the bottom and how deep it is for the insurance industry.

Posted by Jeffrey M. Liggio

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Dental Insurance Striking Information You Gotta Know

Having an accident or protracting an illness can be a problem, so disability insurance has been designed to ensure you still receive an income; you might not be able to prevent the reason you are incapable of work but you can prevent the debt that can occur when you are not providing an income. This can take some of the emotional strain away the financial difficulties it is certain to create during your incapacitation. In fact there is a higher probability of a worker requiring disability protection before they retire than there is of them dying.

The fact of the matter is that disability coverage appears to be less important to the public when they have a family; whereas life insurance takes priority even though they have less chance of dying than being incapacitated. Despite statistics showing that a middle aged worker has a greater chance of needing a 3 month break from work because of an accident as opposed to dying before they reach 65, is almost impossible. Disability insurance by its very nature can be costly so obtaining the best possible rates available is imperative for someone on a budget.

Some of the factors required to assess the premium include the age and health of the applicant but the largest part to calculate is how much income they will need whilst they are incapacitated. One method of lowering the policy premium is arranging for the plan to ‘kick in’ only after the incapacity has lasted for a set period of time. the provider would be less at risk if was only a short term incapacity. A reduced period of cover option would also reduce the premium; although you need to bear in mind that once your period of benefit ceases you would have to support yourself.

Insurance company policies will differ but the majority will only pay a percentage of your lost income so it is a good idea to choose the best one for you and in this instance, the cheapest may not necessarily be the best. There are two policy options available; the first is short term disability insurance which only covers the claimant for a few months of incapacity. The second plan covers extended periods and is called total disability cover; this allows a reduced payment to be made after the claimant shows he cannot carry out the work he was previously employed for.

Irrespective of the type of policy you have, payments for disability are made regularly, every week or month until the end of the incapacitation or the policy, whichever come first. Other key points to consider when looking into health policies are if there are restrictions on:

If there are any medical restrictions
Is the benefit taxable?
Time frames before benefits are terminated
Your current occupation

Remember that every disability insurance policy is different and they will not all provide exactly the same benefits, including how much they will pay as a percentage of your income. With some providers giving 70 percent of the original salary, you will have to watch out for those who will only provide you with a very low 40 percent which could cause financial hardship. This figure will probably be the determining factor of whether you sign with a particular insurer or not but it must be done before any agreement is signed.

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Untold Benefits of Personal Accident Insurance

Most people get life insurance instead of applying for a personal accidental insurance policy. This is a crucial mistake that costs a lot later in case they are not able to continue paying the heavy premium that life insurance demands. The key benefits of Personal Accident Insurance Policy over Life Insurance are as follows:
It is economical and affordable
It requires no medical test or documentation
You can protect all the members of your family at a very low cost.

People who already have life insurance can also take an Accident Insurance as a supplementary cover in case, they have a very active lifestyle and want additional protection against dismemberment and death. The same holds good for their family members.

This personal accident insurance policy is also ideal for people who are not eligible for life insurance cover due to some recent illness, they can still get protection against dismemberment or death due to accidental causes.

Royal Sundaram provides very affordable Personal Accident Insurance. Have a look at it here to check if it fits your needs.

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Life Insurance Is Easy to Buy

Even though most people do understand the need for life insurance, many still hesitate. Life insurance policies are long term contracts, and consumers are reluctant to enter into them because they are not sure which type of coverage would be the best for them.

You can barely drive down the street, turn on the TV, or browse the internet without seeing ads for different life insurance companies. But most of these advertisements seem to promote one specific type of coverage from one insurer. Consumers know that they can buy different types of coverage, but they have justifiable concerns that answering one of these ads will not provide them with a real answer to their most basic questions. People want to be able to figure out which type of life insurance is best for their own unique situation.

So what is the best type of life insurance? First, look at the basic types of policies you can buy:
Whole Life – Sometimes this is called traditional or straight life. These are permanent policies, which mean that they will cover an insured person for as long as the policy is kept in force. Keeping a policy in force usually means that the premiums are paid. Whole life policies can also build up a cash value, and that cash value can earn returns. So some people consider whole life a combination of savings and insurance.
Term Life – Temporary, or term, polices are probably the most popular plans on the market. They only offer temporary insurance coverage, and not an opportunity to build cash value. They also only assume a temporary risk, even though the term may be for a few decades. But for these reasons, premiums will be lower than for permanent policies for the same amount of coverage.
Universal Life – People are are very interested in combining their insurance with a tax deferred wealth building account, look at universal life. Like whole life, universal life, is permanent coverage. The insurance part, and the savings part, of the contract are split out to be more transparent to the policy owner. The cash value in the account can grow at a set interest rate, or by being tied to a common market index. In addition, monthly payments, and even the coverage amount, are flexible and can be changed over the life of the policy as a covered person’s needs and budget changes.

Again, which type of coverage is best? That really depends upon your own unique needs and expectations.
Whole life provides a simple, permanent plan with a fixed premium. Many smaller face value whole life policies are marketed to older people, like senior citizens, as an affordable way to plan for final expenses like funerals.
An individual may be able to afford a larger term life policy because premiums are cheaper. They may only need that large amount of coverage while their kids are young and home mortgage is large.
Universal life insurance can provide a flexible way to have coverage and retirement savings in one account.

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