Posted by Gary (pseudonym) is a successful businessman.He worked in the film industry in Hollywood, and his family was the envy of the community of millionaires.
In July 2021, he filed a complaint, bringing the twoLife insurance brokerHe went to court, claiming he and his family were misled by insurance brokers into signing a $4000 million "free" life insurance policy.
What's up with "free" life insurance?
A "free" life insurance policy means that policyholders do not have to pay premiums out of pocket.
Life insurance brokerWork with a bank or mortgage broker to offer a loan to policyholders to buy a high-value policy.
In a market environment where interest rates have been historically low for many years, this may not be a problem.
In theory, after more than ten years of insurance assets, the cash value in the insurance account will be used to pay off low-interest loans, and the excess will be left to the policyholder.
In this way, the policyholder does not need to take a penny out of his pocket.
When insurance salespeople sell such policies, they often use life insurance's ""Scheme proposal (Illustration)”, the numbers above will be shown to clients, and they will indeed use this arbitrage leverage to make big profits.
Assuming the annual benefit will be so large, the policyholder simply withdraws the money from the policy account, pays the loan bill due each month, and the excess becomes their own tax-free retirement pension.
in other words:An essentially "totally free" life insurance policy worth millions of dollars.
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Fed's violent rate hike bursts leveraged bubble
Starting from 2022, the one-year U.S. dollar interbank lending rate will soar from less than 2% in February to 1% in early September, and the private floating lending rate of policyholders will exceed 9% in just six months. , the policy yield is 4.699%, which is rare in history.
Without the use of borrowing leverage, the impact of interest rate hikes on policyholders is not so great, but this type of policy has already been mortgaged and leveraged, and the ownership is in the hands of banks or trusts, so policyholders are relatively passive at this time. .
Once there were any unanticipated changes—such as the magnitude and frequency of historic interest rate hikes—things didn’t look so good: the cash value of life insurance accounts didn’t grow as expected, insurance earnings didn’t meet annual expectations, and Borrowing interest rates are also rising, and policyholders face "margin calls" and bills.
If at the time of the initial application-Attracted by the design plan of "0 yuan purchase", or the insured participates in the program that purchases life insurance (or called XX retirement plan) with a "fund raising" loan, and has no real asset control in the name of an individual, then there is little room for recovery.
The key issues in all of this focus on two points,One is to make the numbers look good and attractive enough.insurance brokerThe use of high leverage has created the temptation of "free"; second, in the historic interest rate hike environment in the first half of 2022, insurance brokers are also unable to provide follow-up solutions.
While LIMRA does not track and record premium life insurance sales, experts in the life insurance industry believe that such policies have grown exponentially in the low interest rate environment of the past decade.The main source of premiums for some life insurance companies comes from loans.
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Seeking Insurance Emergency Services
Insurance emergency service, English called Policy Rescue.
It is advanced by third-party professional life insurance advisors,A set of remedial procedures for life insurance accounts with compromised designs or in high-risk environments, the main role isUsed to reduce or compensate for the loss of assets of the policyholder and improve the health of the insurance account.
according toTheLifeTank.comAccording to our observation, there are still some premium loan projects with "completely free" as a gimmick selling point in the market.The design scheme of this type of insurance is generally considered to have no actual anti-risk capability within the industry, and only passed the unilateral stress test of the policy itself, which is tantamount to gambling.
Some households that added the leverage of such "free" design schemes before 2022 are already trapped in such contracts and cannot escape.
Birney Birnbaum, director of the CEJ (Center for Economic Justice) Center for Financial Justice, believes that some insurance brokers, using vague language, presented their clients with overly optimistic insurance proposals, and insurance brokers were not obliged to serve the best interests of their clients. Consider.
Seeking insurance emergency services from a professional insurance advisor is currently the only way out for this type of insured family. (End of full text)
(Updated 20220923)
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