Out of the Ordinary Insurance

When people think of insurance, they most likely conjure up images of cars, houses, travel and pets but there are some not-so-standard insurance policies that you may never have thought about!

Believe it or not there is actually a company in Florida which offers insurance against Alien Abduction! You can insure yourself against being kidnapped by extra-terrestrials, and if you are snatched by a bright light from the sky, then you need to hope you are dropped back on Earth so you can fill in the paperwork and make a claim. So if you're worried about seeing UFO's near your home or have been watching too many X-Files episodes then this type of insurance could be just the ticket.

Many celebrities over the years have insured parts of their bodies that were vital to their success. Michael Flatley insured his legs for millions, Bruce Springsteen covered his voice and Egon Ronay took out a policy on his taste buds. It's unlikely that most of the general public would consider such extreme measures but when there's big money and livelihood at stake, it can often make sense.

The term ‘moral turpitude' is not one you hear every day but it refers to a type of insurance policy that covers celebrity endorsements when they go wrong. If, for example, a company paid a celebrity millions of pounds to endorse a product and then during that time the celebrity was convicted of wrongdoing then the policy would protect the company's investment.

Sporting events also come into play within the insurance market and not just in the way you might think with regards to sponsorships. Big sporting events like the Olympics and the Superbowl are often heavily insured against things going wrong and the event not being able to take place. One policy even covered Scottish football fans for trauma should Scotland ever go on to win the World Cup. Another possibility could be to insure against being hit by a stray ball at a golf event or cricket match, because you just never know.

In recent years insuring your pets has gone from being considered rather quirky and unnecessary to being a must have item for animal owners, so who knows what areas of insurance may grow in popularity in the future? All it needs is one or two confirmed Alien abductions and a whole new market could open up!

For most people however, such insurance is nothing short of fantastical and the likelihood of finding insurers to cover such bizarre potential occurrences is likely to be slim at best. There is of course a more down-to-earth side to insurance however than all of these extreme policies and remembering to get a home insurance quote for example before you move house will prove much more useful in your day-to-day life than wondering if E.T. is going to pay you a visit.

Americans fear for their life insurance after financial turmoil

Americans fear for their life insurance after financial turmoil

Americans who have ploughed their savings into life insurance and annuity-linked pension funds were running scared yesterday as financial titans collapsed around them.

"We're receiving phone calls that we wouldn't usually get," said Robert Willis, Executive Director of DC Life and Health Insurance Association, part of the national network that guarantees insurance policies.

"Given what's happening with AIG and Lehman Brothers, people are looking at their life insurance and annuity products and are concerned about these companies going under and what the impact would be on them," he said.

Wall Street icon Lehman Brothers filed for bankruptcy in New York on Monday after suffering massive losses from the subprime crisis of loans to high-risk customers.

The following day, the US Federal Reserve stepped in with a $85-billion bail-out of American International Group (AIG) after the insurance giant also fell victim to the mortgage subprime lending meltdown.

In a statement issued Tuesday, AIG assured its life insurance clients that their policies were not at risk.

Willis tried to reassure them, too, by explaining how warranties such as those provided by DC Life and Health work. Most of the guarantees allow the investor to recover his or her initial investment plus any earnings, up to a ceiling of $300,000 in death benefits.

But the ceiling is only applicable once per person. Someone with three separate pension plans, each worth $200,000, for instance, is protected only to the tune of $300,000, said Willis.

Are insurance companies fair?

As long as the government is disinclined to act responsibly, nothing can be done. So, you should do some research and compare the services provided by the various insurers and the products they offer, as suggested in the following paragraphs..

SINCE THE dawn of time, some type of insurance or the other has been offered; health, disability, auto, life and home insurance are just a few that can be named. The concept of protecting the policyholder against losses is revolutionary. However noble it may be in thought, today, insurance itself has become a risk factor.

Although insurance is required in most cases, the government does not regulate the insurance industry adequately. It results in policyholders answering questions such as, “Will the insurance company pay for treatment, replacement, rebuilding or even my death?” I am sorry to tell you this but buying any type of insurance policy today is like playing the Russian roulette. It is a potentially lethal form of risk-taking, where the policyholder is, in effect, gambling with his / her life. What is even more disturbing is the fact that the policyholders are forced to play the game while the government and the insurance companies bet on the outcome.

Modern insurance companies are money-making businesses which have little interest in the policyholders other than their credit history. Your credit history does not show that you have made your insurance payments on time and have been with the same company for 20 years. Why do they use your credit history? To drive the tariff up so the insurance company makes more money. Who pays more? The poor and the middle class… YOU DO!!! You can argue it’s not right until you’re blue in the face and you would be right in doing so. However, as long as the government stands on the sidelines indicating its unwillingness to hold itself officially responsible for directing the policies and the organisation of insurance, nothing can be done. So, what can you do? You should do some research and compare the products the various insurance companies offer.

For example,

• When a natural disaster struck, did they compensate the policyholders in most cases?
• How many times they raised the tariff in the past five years?
• Do they attach too many exclusion clauses?
• When you call the company, are you required to deal with a call centre where a staff-member reads from the script or an agent who can answer your questions?
• Do you demand that the insurance company hold itself responsible for directing the policies and the organisation of insurance?

Tata-AIG policy holders need not worry

Trouble at American Insurance Group in US will have a bearing on its business in India, particularly its insurance business, which it is running in collaboration with Tata.

However, sources in the industry say that the policy holders need not worry as the financial conditions of insurance subsidiaries of AIG in India is stable, and they can meet all the liabilities arising out of the claims from the policy holders.

Insurance watchdog, the Insurance Regulatory and Development Authority has also expressed concern over the recent developments in the US Financial Markets. AIG, which is a leading insurance group of US, has sought financial support from the Federal Reserve.

AIG is operating in both life and non-life insurance sector. In both the companies, Tata owns 74% stake each and AIG holds the rest 26%. With AIG facing the heat in US, IRDA has asked for a report from both Tata AIG Life Insurance Company and Tata AIG General Insurance Company on the development regarding one of its promoters AIG in the US.

Protections for AIG Policyholders

People with an annuity or a life-insurance, auto or homeowners policy through American International Group are no doubt mighty worried right now as they watch that company struggling.

But policyholders don't need to panic, experts say. For one thing, while the holding company is in financial distress, AIG's insurance subsidiaries are separate entities that are financially sound, regulators and others say.

AIG's insurance subsidiaries "did not receive a bailout; they are financially solvent," Sandy Praeger, president of the National Association of Insurance Commissioners, said in a statement last week. She added in an interview that "state insurance laws regulate the AIG subsidiaries to assure that the assets are preserved to protect the interests of policyholders."

Further, if an insurance company were to fail, each state runs an insurance guaranty association to protect policyholders. Insurers ante up fees to ensure customers of failed firms are protected. Still, those state guarantees are limited -- and that potentially could mean problems for some policyholders if an insurer becomes insolvent.

Your best bet now is to take a measured approach. Find out whether you're fully protected by state guarantees. Contact your state insurance department, or look up your state's rules at www.nolhga.com.

If you're not, weigh your options. Talk to your insurance broker about possible surrender charges or other penalties for exiting your policy or annuity, and determine the cost of purchasing similar products elsewhere. Remember that even consumers with policies worth more than their state's guaranteed limit may have nothing to worry about given that these insurers are solvent.

Life-Insurance Protections

State guaranty associations protect life-insurance policyholders for at least $100,000 in cash surrender or withdrawal value and at least $300,000 ($250,000 in California) in death benefits, says Peter Gallanis, president of the National Organization of Life and Health Insurance Guaranty Associations in Herndon, Va. Some states provide protection up to $500,000.

For policyholders within their state's limits, if a company fails, "there is a very good chance that your policy will be transferred [to a different insurer] and you'll never miss a beat," Mr. Gallanis says.

For fixed annuities, states generally cover up to $100,000, though some guarantee $300,000 or more.

Variable annuities are investment products. Generally your money is invested through a subaccount that is separate from the insurer's assets and not covered by state associations. However, the portion of the contract that promises a payout from the insurer usually is covered.

Usually a failed insurer's business is taken over by another company in what can be a seamless transition for policyholders, Mr. Gallanis says.

"Typically the new insurer will provide all of the protection that would have been provided under the old policy," he says.

But it is possible in some situations that people with life-insurance policies worth more than the state limits may find they're on the hook for a higher premium or a reduced death benefit, Mr. Gallanis says.

Similarly, it's possible an annuity contract might be modified by an acquiring company; for instance, if the promised interest rate is deemed too high. But that's a rare event, requires approval by regulators, and is much likelier when an insurance company's failure is rooted in its policy-writing practices.

Auto, Home Policies

There are similar state guaranty associations protecting consumers with homeowners and auto-insurance policies. If you have a claim filed with a company that then fails, "the guaranty fund steps into the shoes of the insurance company from a claims-paying perspective," says Roger Schmelzer, chief executive of the National Conference of Insurance Guaranty Funds in Indianapolis. Most state guaranty associations cover homeowners- and auto-policy claims up to $300,000, he says.

If you've prepaid a premium, that is also usually recoverable through the guaranty association, says Barb Cox, the group's vice president of legal and regulatory affairs, though the limit may be $10,000 or $25,000.

Meanwhile, if you're simply holding a policy, with no claims in process, then consider shopping around, Mr. Schmelzer says.

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