Leslie Scism
speaker
504 appearances
9 recordings
1 series
first heard Sep 2017
last heard May 2023
Leslie Scism’s voice in public audio — every appearance, attributed to the second.
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Appearances
WSJ Your Money Briefing · The Hottest Thing in Life Insurance Has Serious Risks · 6 Jan 2020
podcast
they will credit as interest in any given 12-month period.
For example, they will perhaps cap at 10 or 11 percent interest as the maximum amount in a given year.
One concern of some consumer advocates, regulators, and financial advisors who aren't big fans of these products is that people don't recognize the costs that are in these policies.
People owe various policy fees every year.
So if you have a flat or down year for the market, the insurance company won't be paying any interest that year or very minimal interest, yet the costs will continue to come out or have to be paid.
So the cost factor is something that critics are concerned people don't recognize.
The fees typically do increase annually.
In essence, the buyer of one of these policies is buying a new term life policy every year.
Term life is just a basic kind of insurance.
Every year you get older, a term life policy costs more.
In general, it will always cost more because there's a greater likelihood of death as you get older.
So every year, an owner of one of these index policies will face a higher cost for the insurance portion of the contract.
That's typical.
Yes.
Another concern that the critics have about the products is that the insurance companies can change numerous things about the policies under terms of the contracts.
Their ability to change is subject to regulation and the contractual provisions.
But nonetheless, the insurers can pay less interest.
They can, you know, like I said earlier, a policy may cap the interest at 10 or 11 percent a year.
Over the course of ownership of this policy, the insurer might bump that down to 8 or 9 percent.
So that's a worry.
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