Life Insurance Company Ratings and Why They Matter Right Now
Welcome to the money advantage podcasts. Empower and business owners with the permission to think differently about money. So that you can consciously choose to live a meaningful and fulfilled life Dow. Our Passion is making money. Simple Fun and doable open. You feel great about your money and getting your money working for you. So you can thrive all right good morning and welcome back to the money advantage podcast. Today we're talking about something very interesting that really relates to your life savings so I want to ask you a question as we are getting started here. Do you want to know that your life savings is safe and secure. I think that's something that we probably all have top of mind right now and if you're thinking of potentially using life insurance specifically whole life insurance to store your savings in a way that you're building cash volumes at a life insurance policy you probably this question. The back of your mind is life insurance really that safe. Is it really stable? Is it secure? Is it something I can trust? And so we WANNA talk with you about today. Life Insurance Company ratings and how strong is the life insurance industry? Really we're going to answer questions like could my insurer go out of business. What would that actually mean what happens then and even though we're talking about a worst case scenario? I think we really want to make sure that. Were shaking this whole thing out and being honest and open and upfront about really the safety and security life insurance companies in the industry as a whole so good morning and welcome to the show Bruce Morning. This'll be both. I don't know exciting is the right word but it will be a challenge To actually explain this to a point where people are comfortable with it But it really a lot of. It's just common sense when you get down to it. So people can think about this common sense. I think It'll be a little bit easier to understand. I Love Bruce that you are always so Oh shoot there's word I'm looking for a now. I'm forgetting what it is. But you're very good at bringing things down to the bare bones of what is most important and offend award for what I meant by that in a second but commonsense. I love that so today. We're talking about protecting and preserving your wealth in this episode about Life Insurance Company Ratings. And why they matter for your safety and peace of mind especially right now so if you WanNa have safety you WanNa have confidence and peace of mind and guarantees. Make sure that your life savings is protected and you WanNa know that the Life Insurance Company and industry as a whole is stable in can fulfill their promises so you can use that life. Insurance Company raised to Double Check Your Life Insurance purchased before you make it so you make sure you're making the most safe and sound decision. Really this is an episode. You WanNa tune into right. Now we're also going to share with you. What the life insurance companies did during the Great Depression. Many many years ago that made them more secure than commercial banks and investment companies and now to kick off this episode. I want to actually share a quick story. So let me tell you about a time when I was riding horse as a child with my family and we encountered a narrow wooden bridge on an unfamiliar trail and what that taught me about making. Sure that what you think is safe and secure really is safe and secure so really quick story on writing my dad my siblings. I don't remember how many of us we had a whole group and were on horseback in. We decided to check out a brand new trail on the neighbors property and we came across this bridge in. We're looking at this really narrow wooden bridge that we know that the horses are going to be a little bit Scared about being able to go across and we wanted to not only make sure that we're in a position that the horses are GONNA BE SAFE. But they're not going to jump over the edge and that the boards are going to not be rotten. They're not stink through and honestly I just remember. I don't remember the rest of the ride much but I remember that part and I remember thinking will bridge is supposed to be safe and secure. It is supposed to be this thing that we can trust. But how do we know for sure? How are we going to figure this out so I remember we got off the horses? We walked across it on our feet. We shook the bridge. We said we kind of looked at it from the side and from underneath and we said well. We think this is safe and secure. We're GONNA go across them with the lightest horse across I. That was the most calm and they were able to make it across safely and then the rest of the horses were able able to follow suit and that just really reminded me about this desire to make sure that if you think something is safe and secure and certain that it really is and it can be scary. If you don't know it's secure. I wanted to say. Thank you joy For watching this morning and she said thanks for sharing this Rachel. So here's we're going to do today. We're GONNA talk about the life insurance companies and how to test out and explore like we did with that bridge why insurers are financially strong and how they back up their claims so Bruce. I know this is something that's near and dear to your heart. I know that several of the authors that I've read around this whole concept are people that you know personally as well so let's first talk about. How do we know that we have safety and confidence and peace of mind in guarantees in the life insurance industry? It's a A couple things that people need to understand because we're going to compare and contrast the life insurance industry with the banking industry and it's it's not that we're saying that People shouldn't put money in banks because it is a is a necessary position for for the economy to have money flowing through the banking system. Is I can't take an actually hand cash if I'm In one city I can actually taken hand caches. Somebody in another city or I can't or in another country for that matter so there there is a necessity having banks but I think what people at one time if they ever would find out what banks were originally set up for. It was a place to store. Wealth and banks and banks did not even exists at the For for a long time because people did not have Actually money a currency and then when currency came it was actually wasn't safe to keep it on your own person A civilization started to it's There wasn't the locks You had to actually protect yourself so forth. So then what what came about was whatever happens in every good capitalist society. That's one of the reasons I'm not that worried about what's going on in the world right now is because a society keeps going forward than these institution called banks that. Hey if you bring us your money right now we will actually protect it for you. And so they had things like a more sturdy building. They had bars on it. They had locks. They had people guarding its songs. Entity would charge you. They would charge you Willing to keep it there so you had to pay them for the protection which makes sense then. They started then some time they started to figure out. Well you know we got a bunch of money here and people don't they're not gonNA come back and get all the money at one time. So why don't we lend it out to people? And we'll charge them an interest rate to actually lend the money to them and and that'll be fine because not everybody's GonNa come back at one time to ask for their money back with an started working pretty well so they thought encourage people to actually give us your money and will protect it. So that is another thing an economic thing that they did to encourage people instead of you us Protect your money. We'll pay you to bring the money to our bank because if they would pay you some money to bring the money to the bank or what. We call interest. We'll pay some interest. If you bring the money to back then we will have more money to then lend out to people. And we'll charge them a higher interest rate than what we are charging you. I don't know of any of our listeners of every thought about the progression of how that happened. But that's exactly how that happened now. There was no regulations at that time. They then of course in some people would come at different. Very very degrees will come in and ask for more money back and then the banking people would get nervous or like what if more people and so. They started the determining how much they really had to have in the bank. If a certain amount of people would come and that would was a reserve of that they would keep now that reserve was just determined by the Open Market. Because if somebody would come into the bank and ask for their money back and they did inhabit that wouldn't reflect well on the bank it's over didn't reflect well on the bank. Then people wouldn't bring their money to the bank. See how this is just basic economics just basic frankly marketing Were marketing our banks. You when you ask for money it will be there and Then they would compete. Bank down the street would say. Hey we're gonNA give you a little bit more interest. But then they couldn't pay too much interest because if they paid too much interest they would have to charge too much interest to loan money and then people would actually come to them to borrow money so this is just great economics here the how the free market works but in eventually the as as all things Happen Society. The Central Central Government comes in and they started regulating. Because they get you know undue arrest from The citizens and the more and more banking regulations came about and so then we had this federal oversight of the banking industry. And I said Oh. That's probably one of the most important elements that we're going to be able to pull forward is that we have federal oversight of the banking industry whereas the insurance industry is independent of that. There's a lot. More decentralisation is regulated state level and insurance companies are not build out the federal government. They have to operate in A. I mean. I don't know if you WANNA call a free market society but they. They're in a position where they're dependent on their own cash flow their own reserves and they work within There's there's a phrase that I'm looking for as well there but they have to work through capitalism not just through relying on the federal government to be able to bail them out. If something bad were to happen yes in yeah and I know that was kind of but that was what I was. Actually setting up is is the difference of why banks are regulated more on a federal level and insurance companies are regulated on the state level the Department of Insurance for every state. And it's not just life insurance also Property casually health insurance. All the insurances are regulated at the state level. And that's that might be surprising to some people because a lot of people think health insurance is regulated by the Federal Government in in. It's not and so two really a what I think are really smart men than I know. Carlos Laura who is a workout specialists in a feeble normal? What a workout specialists a work Carlos has spent forty four years of his life actually helping a distress companies work out their cash flow issues with their creditors to negotiating with banks on a constant basis every day. That's what his business does. And Dr Robert Murphy. Who IS Austrian economists who is very well received by even by Congress he is actually Leib of been front congress and several occasions as a person most Knowledgeable on several economic issues have both written serveral not only books about the about this issue about the safety of of insurance companies but also about how how banking and Dr Robert Murphy Has Some pretty interesting things from an article in December twelfth of bank notes that he writes every month I think this is interesting. That the assets of all commercial banks rose from forty three point seven billion dollars in June. A nineteen twenty one to sixty two point four billion dollars June in nineteen twenty nine so there was an actual run of the banks up their their capital in banks of right up to the Great Depression. And that's an annual compound rate of four point five percent however the assets of life insurance companies grew by more than twice as rapidly as that from seven point nine billion in December of twenty one the seventeen point five billion dollars in December of nineteen twenty nine. That's an annual rate of ten point four percent. And when I think this shows is that what a lot of people don't realize before the The advent of the stock market which which was more accessible to the common man through Through their work through platforms that they could trae stockbroking brokers were really Looking for people that had a lot of assets so common man did not do that. They actually stored their money in life insurance contracts in the bank and I just a your time to bring this up Rachel Is when you think about it financial. There's only so. Many financial institutions are security firms at a sell stocks bonds mutual funds. There's pensions systems. In the United States. There are banks and there are insurance companies and they're all places where people or institutions store their money. I love that you mentioned that and I wanNA come back to that in just a moment but I wanted to point out as well as you said that a lot of times. The common man then stored their money in life insurance policies. What's really interesting to note in? I don't think we talk about this often enough. That with life insurance companies they have generally the good companies have been around a very long time. And so I want to actually share some of these dates with you. So we're talking about strong stable life insurance companies that are mutual which are owned by the policy holders or mutual holding companies in. We're in a position where these have survived not only the civil war in many cases but the Great Depression and the great recession so just a little bit of context civil war. I had to look up the dates because I'm not a history buff. Maybe you are if you're listening and these come naturally to you but the civil war was between Nineteen eighty-six doesn't actually sound right in nineteen eighty three. I believe or a eighteen. Eighteen sixty eighty six sixty five. Now doesn't even look either. So that's a work Rachel Let's just go ahead of next out but the civil war was a long time accounting sixty eighteen six and I think it ended in eighteen. Sixty hurry well. That sounds more than the wrong numbers. My goodness so the Great Depression this. I'm more certain of so. This was between nineteen twenty nine and the late nineteen thirties. So we're talking about almost a full hundred years ago there about ninety years ago and then the great recession is the crisis that happened in two thousand eight that all of us have actually lived through but it can be easy to forget in Just with circumstances now feeling like that was so long ago so if we look at some of the long standing life insurance companies we have. Several companies have been around for a very long time. So for instance Penn mutual has been around for one hundred and seventy two years. We have western southern which owns Lafayette Life. Insurance Company around for one hundred and thirty two years Ohio National Hundred and eleven no particular order that I'm sharing these Security neutral hundred thirty four years Guardian. One hundred sixty years New York life seventy five years and then if you look way back which this is really interesting But equitable life assurance society started a very long time ago and then they turned into a life insurance company and that has actually been two hundred and fifty eight years so. I don't believe that there in the US. I need to check my stats on that again. But if you look up any life of these life insurance companies you'll see that they've been around for a very long time and what that means is the weather a lot of economic crisis they've weathered tremendous ups and downs and we're going to talk about how they came through the great recession. But what's really interesting to note? Is that even? Though we talked today about privatize making with whole life insurance as being a place to store cash this absolutely not a brand new idea. This is not something that people are just becoming aware of today and we didn't know about it before. This is something that is more traditional and ancient and this thing that people used to store their cash in whole life insurance policies with life insurance companies. And so as a whole Bruce. I'M GONNA come back to what you said. There's only four general types of industries that you can't institutions. You can store your money with security firms. Pensions Banks and insurance companies insurance companies are what we're highlighting and focusing on today but it has been around for a long time. Yes in years thing We're we're going to try to compare and contrast this and the first thing I think we need to do is go back to the banking industry and after you heard my story about how the banks actually started so then the federal regulators came in and said you. Will you have to have reserve requirements and those reserve requirements or minimum reserve requirements and? It's called fractional reserve banking so currently the fractional reserve banking reserve requirement is ten percent. That doesn't mean that all banks have only ten percents of what they're They have lent out so example. If you were to put one thousand dollars cash deposits into a bag. The bank is only required to keep one hundred dollars of that in the bank and making lend out nine hundred dollars of that. I read recently that the the average reserve reserves in a bank right now is somewhere around sixteen percent instead of ten percent and that actually goes up and down depending on the needs of the bank and then there's Maybe we'll do another the soda this later. On there's overnight requirements and banks can actually borrow money from each other and songs afford to meet those requirements so what people don't realize is that I've actually experienced this over my life of. I've actually gone into bank on a Thursday and ask for five thousand dollars in cash and they told me can't give it to you and I was absolutely shocked and this wasn't that long ago this'll may have been five or six years ago and I renew the answer why they could give it to us because it would actually bring them below their reserve requirements. But think about that. I mean that's Thousand dollars in actual cash doesn't seem like that Much in this was a major regional bank. They said you could come back tomorrow on you. Could you could get it and I said well how much can get and I believe the number was like thirty nine hundred dollars that I could. I could get and so. That's the idea that there that the all the money that we give the banks is not in the bay. Now a Lotta people say well. That's all right because we have something called the Federal Deposit Insurance Corporation or the FDIC which was established to actually protect banks from going under but the fact that a matter is bank still make bad loans and they still go under and this was never more trouble than what happened in the Great Depression and the Great Depression saw many many banks go under and of course at the same time you would have had insurance companies as we reported that the insurance company is around during the Great Depression to so we go ahead and talk about that right now as they did during the Great Depression. So I'm and you can pipe in at any point in this as well and we have a comment as well from Nolan Rosler And I'm not sure specifically which portion he's referring to but he's had actually the Fed rescinded that rule. There's no reserve requirement anymore. As of two weeks ago I probably I think maybe you know that. They're constantly changing the reserve requirements. So I'd have to look at that and I do remember hearing something about that but that was. My point is constantly changing the reserve requirements. Excellent okay well. I am just going ahead and updating their also when we look back at the Great Depression what was really interesting is There's several statistics on this end. We're GONNA link to a couple of articles again through banknotes and these articles one of them was written by Carlos Laura and one by Robert Murphy that you referenced earlier but they talked about during the Great Depression There were several banks closing. And there was actually a run on the bank. So this was interesting because as you had fractional reserve banking at the time any depositor who wanted to go get their money out. One person would not be a problem however when you had a situation where all of the depositors wanted their money out at the same time there was not enough money in reserves to satisfy that demand and so there actually was a banking holiday and they closed the banks. This was on March six in nineteen thirty three. They actually closed all the banks and then there was the emergency banking act. That was passed on March ninth when Roosevelt had just stepped into office and the the banking the emergency banking act then allowed banks to reopen when they were in a satisfactory condition to be able to provide To provide money to depositors and so they were. Several banks were allowed to reopen as of March thirteenth or March Fifteenth. And at that time two thousand one hundred banks never reopened so that was some of the bank failure that happened around that time. Now I also had seen and I'm not sure where my notes were on this okay. Only during the Great Depression. Thirty eight percent of banks failed and only fourteen percent of life insurance companies now. What was interesting about that as well. Is that of those life insurance companies. If a life insurance company goes under that does not mean that all of the policyholders are left out in the cold. What that does mean. It's usually there either Bought out by another life insurance company. And what the experience. The policyholders is during that time is usually that they still have all of their claims paid and they don't experience any interruption and so that was one of the main points that insurance on a specific on your your doctor. Murphy brought that up in. He also said this guy is Has written a lot of books and he researches all the time he also says there's been claims that nobody has ever lost money in a life insurance contract now. He says he cannot find anything the back that up but he also cannot find anything that actually says people have lost money in life insurance contract. But what's interesting that I talked to my clients time about this. Is they say well. How can a life insurance company that actually gets in trouble? How can another life insurance company come in and purchase it on pennies on the dollar and the life insurance contracts still be ballot? How does that make sense will? If you understand how businesses work their start startup capital to every business will the life insurance contracts? Are the same way their start up costs to every life insurance contract at the very beginning in actuary has to design. An underwriter has to decide whether a person is healthy. Enough for you have to send a nurse out of the Home Office expenses and you have sales expenses so all those expenses come at the very beginning of a contract so season contracts will not have those expenses anymore so life insurance companies are very matter of fact they very glad to go purchase those contracts because they don't have those expenses at the beginning up in at the contract they have all the capital from the cash value that is then instituted into their new capital requirements. And they have more money to actually make money with so they're really happy to do by these contracts especially with no expenses on them and that's how it happens in the life insurance industry of if a company gets if a company gets in trouble and we're gonNA come back to that in a second because I want to talk about how life insurance companies are so highly regulated and where insurance company even a week company has significant assets and that they do still have value as a company. But what happened is if you look at the Great Depression we're GONNA go back to depression similarly with the great recession the two thousand eight crisis that happened. You see the banks. I'm sorry. Uc that life insurance companies have had near invincibility. And fortitude. This Carlos Laura saying the near invincibility in fortitude of the life insurance company industry is unmatched by commercial banks and investment firms. So you see life. Insurance companies coming out. Emerging from crisis financially sound issuing policies pain claims and serving servicing. Inforce BUSINESS. So WanNA come back to that banking holiday in the Great Depression. So what happened is that there was the the banking holiday where nobody could go to the bank during that banking holiday timeframe and get their deposits or their money out of the bank so they just had to wait and then we saw several banks just closed and never reopened so at the same time then people as as we're saying that life insurance was a strong place where people were storing their cash. They then returning to life insurance policies and trying to get either the cash surrender value or the cash. The order of actually are wanting to take loans against the yes so cash value by surrendering the policy or taking a loan from the policy. Because this is a place that we talk about with private banking and whole life. Insurance specifically taking policy loans is an ideal place to be able to access your capital so people knew this restoring money in these policies and unfortunately what they had to do is have an insurance holiday as well and most people. Don't talk about this as greatly so I wanted to highlight. This is this is again in one of the articles that we will be posting the link to so what happened is during the insurance holiday is that asset values were comfortably in excess of policy reserves during the entire period but they were worried that if people started taking too many policy loans that they were not going to be able to Have as much Networth in the company and as much reserves and that they would have to go out and purchase additional reserves and they wanted to be in a position where they were coming to the brink but not over the edge insurance companies were looking at this potential concern for them on the horizon and Saint. We can't have all of the policy holders requesting their capital at this time. Not because they didn't have the money to give but because they needed insurance companies have to have a certain amount of assets in certain locations to make them stay viably financially strong and so this is something that is tested through third party reading services. Yes which we're GONNA talk about those again in the second so they were coming to a position of potentially being in a dangerous spot and what happened is that they had this insurance holiday also and that meant that people could not get to the Castro value and taking policy loans however even during that time insurance companies still continued to pay death claims and it wasn't a complete and total shutdown of access to your capital. Because in that time you still could get a hundred dollars if you proved dyer and demonstrated need so you can still get one hundred dollars of either Castro value or policy loan. And then what happened? Is that insurance holiday actually fully lasted for six months? Now it tapered off over the last few months. What actually happened is that The insurance holiday starting March sixth and then April Third New York. Lead the charge on this and then twenty eight other states followed suit. So again this was not a nationally mandated thing. This was organized by the states. But by a third New York allowed loans or Castro undervalues for paying rent or taxes than by June seventh they relaxed the standards again tubular get funds. If you stated how you intend to use the and then September sixty emergency was over. Insurance Law went back and forth and they could pay cash surrender values and grant policy length again but what was really interesting. During the time that banks were failing customers in banks were losing money. The federal government had to step in and bail out the banks. There was a total suspension of banking activity. And if you were a customer of the Bank you couldn't get your money at all and win. This holiday was over. It wasn't a solution. It wasn't like a cast that healed the Banking Industry. They still were in dire straits and in a terrible financial position but insurance companies had financial strength and the ability to make their contractual payments including policy loans through right afterwards so they were still a they were in a position of strength coming out of this insurance holiday so their ability to make policy loans was challenged but it wasn't prevented and then even when the states intervened their core business of providing death benefit was never interrupted so just to see how to industries navigated through the Great Depression. And you could say the reason why we're even considering or thinking about this at all. Is that if we are concerned about going into economic crisis we can look back at history and say how has historically this industry whether this type of crisis and how can we expect that in a worse case scenario of not not what we think is going to happen? But how in a worst case scenario would my money and my reserves in a life insurance policy. How would that be handled? We don't often talk about this but one of the things they also were able to continue to pay out there. Annuity payments. Oh yes and that is something that people may actually be more in touch with that even the whole life. Insurance annuities are guaranteed payments. A much like a pension and they are backed by insurance companies and they actually use the word guaranteed just like the whole life. Insurance companies use the word guaranteed and. I and I tell people all the time. In order USA guarantee there has to be a lot of lawyers at have. Look at this and say how can you use that word guarantee while they can use the word guaranteed because they know historically what has happened they also know the capital requirements of these insurance companies? And they know that there is a guarantee a guarantee fund that these insurance companies must pay into similar to FDIC. Although it's not backed by the full faith of the of the government But the guaranteed association is something that's similar that every insurance company that wants to do business in the state has to pay into so that a certain portion of of their Money is still guaranteed by the insurance guaranteed. Just like depositors AC- insurance is only guaranteed up to two hundred fifty thousand of those different limits for every state. We can talk about some of those but really you have to check your state to see what. The limits are absolutely. I think we are in the article. It mentions three hundred thousand dollars death benefit in one hundred thousand dollars of US Pastula undervalue. So but just realizes even more protections going on within the insurance industry. As far as that goes I feel like we have so much more that we want to cover and can cover on this. Let's answer a few specific questions. So if you want to make sure your insurance policy is stable and secure specifically your life savings in your cash values protected. I want you to know that. It's a highly regulated industry and the goal of regulating. The insurance industry as a whole is to protect you as the policy owner. So that's just something really important. I'll highlight a few brief things about that. One is that they're very conservative. Management so insurance companies have a requirement. For how much assets they have to have assets over liabilities. They also Are in a position where the state regular regulators require capital cushions so they require the insurance company to overstate their expected. Future claim costs and have reserves even over that so they're conservative on top of conservative. Let's let's be a little more. What they're talking about is what we're tell the issues which means the Life Insurance Company has a liability to pay out claims and to provide you your cash. Those reliability is on their balance right so once again in more simple language than what they're saying. Is You have to predict that more. People are going to die than actually will die. And that's important when we're talking about this episode is during the pandemic you know. A lot of people are like what if a lot of people die? Well that wouldn't be good for insurance companies but insurance companies over already factor that in to their Their calculations and they have more reserve requirements. And here's an example of the top insurance companies mutual insurance companies. They have an average of one hundred and seventy dollars for every one hundred dollars of claims that they have promised in the future. We actually work with some companies that have one hundred fourteen dollars for every one hundred dollars that they have so not only do they over state their mortality expenses but they have more money in reserve. the towners even in times of stress. You can see how they're very very well capitalized. Excellent and that is the main focus of an insurance company. They actually use something called sap for their Accounting Principles. This statutory accounting principles and it's different than most people use gap. The generally accepted accounting principles was interesting. Is that the sap statutory accounting principles are more focused on solvency and making sure that a company is solvent and they're way more conservative than gap which really focuses on company valuations. So that was really interesting to me. Bruce just a point that you had made earlier the Insurance Company is operating in a competitive profit in Los Environment. That was the the word I was looking for. They have to own their own safety net. In many ways and so because of the asset requirements that insurance company has they often will have a tremendous amount of assets that have real value that if a company did have to be liquidated which is a last straw last resort there still has tremendous assets of that particular company owns that can be sold and then and then distributed according to policy owners making sure that they get their cash or Rachel. So that's a really good point about a competitive environment because this comes up with people that are trying to figure out if they WANNA use life insurance company a life insurance company Beer Life Insurance Company and get paralysis by analysis or like. I want the absolutely best insurance company. Who's paying the best dividends who has the best loan rates of the fact that a matter is is that they have to be competitive. One can't be paying out a whole lot of really large dividend compared to all the rest of the there's can be slight differences and some of them. Can't they couldn all of a sudden raise their loan interest because people wouldn't use those companies it's a? It's a competitive situation. Would you really looking for is one that has great customer service in one that has great financials guarantee financial capital requirements? And almost all of them do so. Yeah this is. This is what you're trying to figure out. Okay now. Why do we know that they have and great? Capital Requirements is that they have third parties. That actually go in. And look at this and ones that you've probably heard of before a Moody's and finch ratings an and there's something called Comdex score for insurance companies which is kind of a compilation of all the scores and the very very strong sorts of third party. That's actually looking at this. What I want to say about that as well. Is that the third party ratings. They're usually on a scale of alphabetical scale. And there's actually a lot of complexity inside of all of these the SNP Global Ratings. Moody's Fitches Am am best specifically focused on insurance companies. You can learn about all of these. But basically their credit rating agencies that figure out how Solvent Company is. And how likely they are to be able to meet their financial commitments and so they rate either whether they're on investment grade or non investment grade credit ratings. And so they offer a score that you can publicly find out. So there's like triple A. Down to Not rated or D for distressed. And so. What's really interesting is that you want to be working with companies. When you're looking at a letter grade you want to be in a position that you're over an a minus in in terms of a letter grade rating and then the Comdex scores. Kind of overall overarching. It combines a bunch of different rating agencies scores Altogether Comdex scores actually zero to one hundred percent. And so you want to make sure that you're working with a company that eighty or better on the Comdex score and that means you're going to be working in the top twenty percent tier of insurance companies so that's one really important thing to note that when you look at insurance companies that have failed and there is a website that shows. I can actually link that in the show notes as well you can find out that the insurance companies that have failed usually were poorly rated or they were very small companies as opposed to the long longstanding companies that have paid claims that have been through the Great Depression a great recession that have been standing the test of time these companies. That are having strong. Ratings right now are not in a position where you have to be concerned. You and I want to make sure that our listeners understand that failed does not mean that the policy holders actually lost money on just means that they are no longer in business but another insurance company comes in and purchases those contracts. I think Cardinals did a great job of talking about one when this happened. There's a liquidation event. That happens and so when an insurance company comes in there's a cost of administration of that liquidation event is the first people that get paid and then employees at work for the company they get paid and then policyholders are third in line to get paid before all other creditors get paid and then of course if it is a stock company which we we don't espouse for this particular Banking situation but if it is a stock company they are the last people to get paid as far as stockholders in that stock company. A so you can see how policy odors claims are very very Very high up in in liquidation of. That's absolutely and I think what was really interesting is again. That the articles through banknotes with Carlos Laura and Robert Murphy really articulated as well that they did not know of anyone who as policy owner actually suffered a loss even if they were having a life insurance policy with a company that went out of business and so that was just a really strong Peace of mind and safety to me. That doesn't mean that. If you are with an insurance company that happens to go under that year in a position that you would. I can't say with certainty that you would never experience any type of loss but knowing that no one has up to this point that we can find or in research is very encouraging your Rachel over my thirty plus years of doing this. I have seen this. I haven't I haven't I don't witness a company going under failing and then taken over by another but I have had policies that we had the dig back. I will mention a specific names. I'M GONNA make one up. Let's just say the Montana Mutual Company is a lot of these companies. Actually were named after the states and I don't even think there was a Montana mutual company. That's why use it in. They were then bought by Axa Life Insurance Company that acts alive then sold their company to venerable life. And so you'll have somebody. That has a policy from Montana. Mutual back in the sixties fifties and then the person dies and you actually call them in a in. The customer service number doesn't work and then you have to do some research and find out that they turn changed into accent and acts of change in the venerable but then you finally get the venerable and and you get the payout for the death benefits and so that's a real life example of how the how I've seen this worker were over my career. I really appreciate you sharing that because I have not personally experienced. That and your tenure in the industry has been a little bit longer a significantly longer than mine. So I really appreciate you sharing that so I think I'm just really to be able to wrap up this whole idea. We were talking about Life Insurance Company. Ratings we're talking about if you're going to put your life saving somewhere that you really want to make sure that they are guaranteed their safe. You have this piece of mind and confidence. It's going to be there for you. You Really WanNa know for sure. What's worse case scenario? What would actually happen if the life insurance company went out of business what I want to encourage you. Is that by all of this research and all the things that we're sharing today it's a tremendous amount of peace of mind to know the life insurance company industry. The industry as a whole has weathered tremendous crisis. And they've come out strong and that's why the recovery to policyholders is very high even outside of Christ or even after coming through crisis so what I wanted to just go ahead and share with you just like that bridge that we walked across on horseback. Who with which horses are very heavy? I mean they're like two thousand pounds a piece on their their feet are very pointy and so if if they were going to go through the bridge you really really would not want that to happen house for Rachel there. You go all concentrated in a very small section small area Yes that's the the physics scientific way of explaining so I lived to tell the tale. I lived to finish the ride. I actually don't remember the rest of it. I'm sure it was exhilarating. But that particular moment of trepidation and fear and concern and worry were all standing. There really scared and wanting to make sure were. We're going to live through this experience. That maybe the same feeling that you're having right now with your money and saying how do. I make sure that my money is going to be there for me. So we hope that this is brought some peace of mind some confidence and some clarity to you just in terms of doing your own research to figure out where you want to store your life savings so if you'd like to learn more about the liquidity and stability of the life insurance industry to really protect. Your Life Savings. We have a free resource for you. That's called the quick and easy privatize making guide for investors. You can get that at private. Banking SECRETS DOT COM slash free guide. And we also have a course that really digs deeper into that. If you're interested and then if you are ready to talk with someone about your personal situation and you're trying to figure out is privatized banking with whole life insurance something that I can use. Is this GonNa work for me? Is What would work in my personal life to be able to store my savings and have that peace of mind in that confidence. You can talk with us. The advisor team. At at the money that I almost had at privatize making at the money advantage would be happy to talk with you about that and so you can go to book on our calendar. We'll have the link in the show notes as well and that is at the money advantage dot com slash calendar so inclosing. Thank you for being with us today. Thank you for Just exploring what you can do to set yourself up financially for success in enclosing. Please remember. Success leaves clues so model the successful few not the crowd and build a life in business. You love discover the secret of how to earn a return on the same money in two places at the same time so that you can strengthen your investment returns we've created a free guide for you explains the top three things. 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