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Household Finances

Do you have Life insurance or Bonds?

16 years ago

If so, you may want to read this article.

The Great Bond Insurance Cover-Up

by Martin D. Weiss, Ph.D. 04-28-08

A link that might be useful:

http://www.moneyandmarkets.com/Issues.aspx?NewsletterEntryId=1707

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Comments (4)

jakkom
16 years ago
Both life insurance with cash value and annuities are 'caveat emptor' products. Most people are better off without either. But then, I'm a level premium term insurance type, LOL.

Ambac and MBIA may crash and burn, but don't kid yourself, other companies will step in. In fact, Warren Buffett's already made several moves in this area. And he isn't the only one flush with cash.

Interest rates and dividends may be adjusted, but the money will continue to circulate, one way or another. The only time money is totally worthless is when it sits inside a mattress and no one knows it's there.
User
16 years ago
If Ambac, MBIA and FGIC crash and burn, it doesn't mean that the underlying bonds will go belly up. As long as debt service is paid by the issuer, who needs the insurance anyway?

Plus, this business with the insurer's has been going on for months now. Martin Weiss is finally jumping on the bandwagon that others have been aware of for some time.
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Hi Moni, Whole life covers one for the rest of one's life ... and, as they say, builds cash value. But the cash value relates to the lower price of insuring one while young, with the actual annual costs rising as one ages, resulting in the cash value decreasing as one gets old. One can borrow against the cash value, resulting in a cost for interest. It is my understanding that the cash value disappears when one dies: one then gets only the death benefit that was guaranteed. You can have the cash value, or the death benefit ... but not both. Term insurance covers the life insured for a specified number of years, e.g. 10 years, 20 years, etc., usually for the full face value, but I think that, though seldom used, decreasing term is available, where the payout rate diminishes as the years in that contract period go by. As one ages, the possibility of one's dying during the period of the next term increases, so the price quoted rises, very substantially as one ages. It becomes very difficult, if not impossible, to initiate any policy for a person over age 80. As Iva Mae says, in Canada "Term to 100" is available, to cover one until age 100. It may cover one beyond that, but I suspect that the coverage dies on one's 100th birthday: if it's claimed that such isn't so, I'd want it in writing. Ordinarily, over one's lifetime, a fanily's need for insurance decreases, being for a large amount when young, if there's a family, to pay off mortgage (and I don't like insurance just to cover mortgage), and provide the surviving spouse and small children with their needs until they become independent, probably including at least part of the cost of advanced education. As one ages, the need reduces, so, while the premiums for a specified amount of term insurance increases, the amount that the family needs to carry reduces, thus they can continue to pay less for term than for whole life with the difference available for investment. The idea then is that the amount of one's invested asset increases over the years, thus reducing the amount needed to support the family's needs. The goal is to have enough assets built up over the years to be able to self-finance, thus being able to do without term insurance late in life, when it becomes very expensive. Thus, we often hear the saying, "Buy term (when young) and invest the difference (between the cost of whole life that stays constant through the years and term, which increases as each term expires). ole joyful
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dreamgarden
Original Author
15 years ago
"The only time money is totally worthless is when it sits inside a mattress and no one knows it's there."

I disagree. And so do those who are probably never going to see their money again due to all the dirt dealing on Wall Street. At least one consumer group is trying to do something about it.

So What Is The Big Deal About Auction Rate Shares Or Auction Rate Preferred Shares?

* The big deal is pretty simple. According to Americas Watchdog, " it was all $320 billion dollar lie on the part of name brand US banks, financial institutions and stock brokerage firms". Americas Watchdog is demanding US Banks, Financial Institutions or name brand US stock brokers refund the $320 billion dollars they cheated tens of thousands of US consumers out of. This stock broker, US Bank, financial institution fraud is characterized an auction rate preferred shares or an auction rate shares scheme..... "safe, or just like a CD". Not one small investor was ever given a prospectus. Small investors, including retired people were told by a US bank, a name brand stock brokerage firm or financial institution that they, "could get their money out when ever they wanted, there was no risk, the investment was 100% liquid", etc. Now thousands of US citizens cannot get their money out of these "safe" investments. Americas Watchdog has called for the resignation of SEC Chairman Cox over this national outrage. $320,000,000,000 representing the life savings of thousands of innocent US citizens and the SEC does nothing? Americas Watchdog has characterized the auction rate preferred shares and the auction rate shares flim flam as, "the single worst case of fraud in US history". Victims are welcome to call Americas Watchdog at 866-714-6466. How did this happen? According to Americas Watchdog, "it was all about greed and tricking mom & pops into thinking these exotic investments were just like cash".

* If Wall Street, A major US bank or stock brokerage firm would lie to small US investors about the liquidity an investment that was supposed to be liquid, what else have they failed to tell US citizens?

Consumers who feel created by the auction rate preferred shares or auction rate shares fraud are welcome to call Americas Watchdog anytime at 866-714-6466.

A link that might be useful:
ARSWatchdog.Com
joyfulguy
15 years ago
These stinky U.S. funny-bunny mortgages and other supposedly Asset-Backed Commercial Paper ... were some stuff that a bank that I have held shares in were involved with.

Plus - they backed a company that was insuring those mortgages ... that has, recently, been in danger of bankruptcy, I've heard.

The reduction in value that I've had to cope with?

From a year ago - something under $15,000.00 now ... it was more, a while go.

Part of that reduction in value relates to a general drop in the stock market over that period: it's not all related to that financial skullduggery.

ole joyful

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