Competing Against Globe Life

It s just a discussion, JD.

Ohio requires anyone buying from a Fraternal sign a statement that in part reads: "If there is an impairment of reserves, a certificate holder may be assessed a proportionate share of the impairment."

From DOI: Fraternal benefit society insurance benefits are legally required to be assessable. In the event that a society's claims paying ability becomes impaired, the members may be required to pay their proportional share of the deficiency. This is in keeping with the longstanding traditional status of fraternal benefit societies as charitable and benevolent organizations, as to which the members are both recipients of and providers of mutual benefits among the membership as a whole.
Fraternal benefit societies are subject to significantly reduced capital and surplus requirements, and are not rated by A.M. Best or an equivalent.


So how do they assess a cert holder? How do they collect it?

What has you thinking the law changed in the last 100 years so they can't raise premiums now?

I was always under the impression they do it by raising premiums and want to know if that is not the case. And as I have and do sell Fraternals I want to know what is fact.

It is a matter of semantics.. They do not "raise" the premium but levy an "assessment" .. They are not the same thing but they have the same result.. The certificate holder (not policy holder) pays more.. either in cash, or by having the assessment withheld from non forfeiture values when accessed or being withheld form the death benefit. Yes, cash values and death benefits are guaranteed but that doesn't mean the certificate holder will actually receive them since they are subject to an assessment levy. Has it ever happened? Yes but rarely and most were years ago but it seems that I remember a small Catholic Fraternal that levied and assessment not too many years ago.
 
It is a matter of semantics.. They do not "raise" the premium but levy an "assessment" .. They are not the same thing but they have the same result.. The certificate holder (not policy holder) pays more.. either in cash, or by having the assessment withheld from non forfeiture values when accessed or being withheld form the death benefit. Yes, cash values and death benefits are guaranteed but that doesn't mean the certificate holder will actually receive them since they are subject to an assessment levy. Has it ever happened? Yes but rarely and most were years ago but it seems that I remember a small Catholic Fraternal that levied and assessment not too many years ago.

The cert holder will consider their premiums went up.

So do they give the cert holder options and let them pick?
 
The cert holder will consider their premiums went up.

So do they give the cert holder options and let them pick?

Can't really answer that as I have never went through it but you can be sure that if the certificate has any value, the assessment will be paid one way or another. If they get mad and drop the coverage, they will withhold the assessment from the value. Since the automatic NFV is extended insurance, then the extended insurance would not last as long.. If they take a reduced paid up policy, the face would be reduced or if they cash out the assessment would be withheld form the available cash. If they keep the coverage and continue to pay, the assessment would be withheld form the DB. I would assume if a person wanted to pay their assessment in cash, they would let them. Any of those options would reduce the Fraternal's liabilities and thereby keep the organization solvent which is a good thing.
 
Can't really answer that as I have never went through it but you can be sure that if the certificate has any value, the assessment will be paid one way or another. If they get mad and drop the coverage, they will withhold the assessment from the value. Since the automatic NFV is extended insurance, then the extended insurance would not last as long.. If they take a reduced paid up policy, the face would be reduced or if they cash out the assessment would be withheld form the available cash. If they keep the coverage and continue to pay, the assessment would be withheld form the DB. I would assume if a person wanted to pay their assessment in cash, they would let them. Any of those options would reduce the Fraternal's liabilities and thereby keep the organization solvent which is a good thing.

Yes, which is a good thing but it is disconcerting that they go to our clients for the dough instead of the gov.

We can debate until the cows come home how likely or unlikely it could happen but a lot of things no one could have imagined have happened.
 
If it is not going to happen guarantee it. Also the guarantee only applies to the company's ability to back the guarantee.

Other than commission and maybe easy underwriting why do some FE agents lead with fraternal like Foresters and RNA? Price? There are policies with lower premiums that guarantee the premium and cash values. I am sure there is a sound reason.
 
If it is not going to happen guarantee it. Also the guarantee only applies to the company's ability to back the guarantee.

Other than commission and maybe easy underwriting why do some FE agents lead with fraternal like Foresters and RNA? Price? There are policies with lower premiums that guarantee the premium and cash values. I am sure there is a sound reason.

A lot think they can sell life insurance easier if they can combine it with the sizzle of the Fraternal benefits.. I think JD is the only one I know of that has sold Fraternal that flat out makes the statement, "I am an insurance salesman not a fraternal benefit salesman."
 
A lot think they can sell life insurance easier if they can combine it with the sizzle of the Fraternal benefits.. I think JD is the only one I know of that has sold Fraternal that flat out makes the statement, "I am an insurance salesman not a fraternal benefit salesman."

I was guessing it was the benefits. I can not believe most members use them or the cost to the company would be to high to offer them for free.
 
I was guessing it was the benefits. I can not believe most members use them or the cost to the company would be to high to offer them for free.

Ah.. but they are not "free"..Most Fraternals have a membership fee that funds the benefits. RNA is $14.95 per year for a General Membership.. Not sure how they handle Beneficial Memberships..BTW, the fraternal benefits are not guaranteed so they can be here today, gone tomorrow.
 
Ah.. but they are not "free"..Most Fraternals have a membership fee that funds the benefits. RNA is $14.95 per year for a General Membership.. Not sure how they handle Beneficial Memberships..BTW, the fraternal benefits are not guaranteed so they can be here today, gone tomorrow.

Pure guess however seems that if many members used a particular benefit they would have to raise rates or delete the benefit. Seems like there was one Foresters dropped a couple years ago. Seem to remember it was critical illness or accerated benefit. Not sure if it was current members or new members.
 
"And yes some fraternals have failed. I'm a member of a small one that is struggling to survive right now. It probably won't make it. It's one where you pay a membership every year and one of my clients strong arms me is the only reason I'm a member. The benefits are smoke and mirrors." Newby wrote this in July this year.

As long as client understands the particulars of what they buy...but which one of them remembers even a week from now. Be safe offer a policy.
 
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