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This book was written and published in 1980. Its popularity was largely responsible for America's life insurance industry to create "Universal Life Insurance", a more difficult "savings-plan" or "investment" product to analyze than "whole-life" insurance. UL contains an underwritten payout calculated by actuaries based on mortality tables enabling it to be marketed as life-insurance.
Included here are the book's Introduction and several of its original chapters —
The information herein is not intended to replace technical information on products offered by individual companies. Neither does this book attempt a throrough treatment of the deficiencies of the whole life and "legal reserve" (cash value) life insurance concepts, which have been well documented elsewhere.*
This book provides the Author's opinion in regard to the subject matter covered. It is written and sold with the understanding that the Publisher and Author are not engaged in rendering legal, accounting or other professional service. If legal advice or other expert assistance is required, the services of a competent professional person should be sought.
The open comparison of utilizing Modified Premium Whole Life Insurance and separate funding vs. "legal reserve" (cash value) insurance speaks for itself. These newer products, therefore, are being widely utilized in the process of efffecting FINANCAL RECOVERY by replacing low-yield and out-dated "money-back" (cash value) type life insurance policies.
State regulations regarding terminology acceptable in sales presentations vary, as do recently enacted life insurance "replacement regulations". Agents and brokers must adhere to their own regulations. The fact that industry-sponsored "replacement regulations" are clearly not in the public interest and patently designed to protect the companies against the loss of their cash value accounts must not dissuade the honest agent from exercising his responsibility to his license, to his client, and to himself.
The Author specifically disclaims any personal liabiity, loss, or risk incurred as a consequence of the use and application, either directly or indirectly, of any advice or information presented herein. Insurance agents should check with their own insurers to become knowledgeable about their individual MPWL policy provisions.
NOTE TO THIS COPY PLACED ONLINE IN 2023 OF THE WIDELY-READ 1980 BOOK, FINANCIAL RECOVERY:
The U.S. life insurance industry is regulated at the state levels by its "commissioners". The product referred to herein was submitted at state-wide levels for sales approval. It was cleverly termed "Modified Premium Whole Life Insurance" and, as a "whole life" product, it was made available to the public. Soon referred to more accurately as "deposit term insurance", and a viable means for enlightened agents to replace problematical "whole-life" policies for reasons presented in FINANCIAL RECOVERY. As such, it became soundly deprecated by industry sources and by misguided licensed agents. To the author's best knowledge, the MPWL product is no longer made available by the U.S. life insurance industry. For a clearer understanding, when reading these pages, replace "MPWL" with "Deposit Term Life Insurance".
FINANCIAL RECOVERY — Introduction
AN ASIDE (ON BEHALF OF A GOOD MAN)
The following tribute to the late Philip A. Hart, United States Senator from Michigan, should be unnecessary. Unfortunately, due to the 1973 hearings on the life insurance industry in the U.S. Senate's Subcommittee on Antitrust and Monopoly, of which he was chairman, it has become fashionable, in life insurance circles, to hear Philip Hart referred to contemptuously. Understanding, as we do, that the agents who fall prey to this sort of mass psychology do so from ignorance, we feel compelled to recall some facts about this man.
Philip Hart graduated from West Philadelphia Catholic High School and went to Georgetown University. At Georgetown University he was president of the student body and he graduated cum laude. He went on to law school at the University of Michigan and received his J.D. degree. When World WarII began he was commissioned a second lieutenant in the United States Army. During the D-Day invasion of Normandy on June 4, 1944, he was wounded. He rejoined his division in December and was discharged in 1946 with the rank of lieutenant colonel. He was decorated with the Bronze Star with clusters, Invasion Arrowhead, Purple Heart and the French Croix de Guerre.
He helped to lead the legislative battles to end bigotry and he was in the forefront of the fight to aid consumers. He grew a beard, the only one in the Senate in his time, at the request of his six children as a token of solidarity with the youth of America. Upon leaving the Senate in 1976 Philip Hart said that during the years he spent in the Senate, "We . . . spent for our "security" God knows how many hundreds of billions of dollars ... Would we be less secure if we had spent ten percent of it on food and medical schools and other social needs?"
He missed, due to hospitalization for cancer treatments, the early sessions of the Senate Select Committee on Intelligence hearings which detailed the abuses of the FBI and the CIA. However, when he made his first appearance and heard testimony about the FBI's actions against Martin Luther King and against others who had been openly critical of official policies, he moved most of his colleagues and his audience deeply with a monologue stating that his children had been right in the 1960's to claim, over his protests, that the government was trampling the rights of citizens.
Throughout his 18 years in the Senate, Philip Hart was not a fiery orator or a seeker of sensational headlines. Yet it was a measure of the esteem in which the gentle, slightly built man was held by his colleagues that in August 1976, the Senate named its new Senate Building under construction near the Capitol, the Philip A. Hart Office Building.
The Senate majority leader, Mike Mansfield of Montana was asked on his last day in the Senate who had been the most outstanding Senator he had met. Without a pause, Mr. Mansfield replied: "Philip Hart. He is a man of great courage, great compassion, great determination. Don't be fooled by the exterior. He's a man of steel. He's a man who is modest, a real back-bencher."
"In debate his voice almost never shook the rafters here", said Senator Edward Kennedy of Massachusetts. "He preferred to use his words to shake our conscience and our votes. He never had an axe to grind, but he always cut through every issue to find the truth and open it up for all of us to see."
President-elect Jimmy Carter praised Senator Hart as "a man of unquestionable integrity. He exemplified the highest of moral and ethical standards in public service. He was a friend of the American consumer and a tireless worker against injustice."
In 1973, as we have mentioned, the U.S. Senate subcommittee on Antitrust and Monopoly heard testimony on the insurance industry. The total oral testimony and "Material Submitted for the Record" covers three volumes and 2,216 pages. It is difficult to find words suitable or strong enough to describe the shocking and disgraceful disclosures recorded by this committee of the greed, irresponsibility, and betrayal of the public trust by the life insurance industry.
Philip A. Hart died at his home in Washington of cancer on December 26, 1978 at the age of 64. He was buried on Michigan's Mackinac Island. He never lived to see reforms forthcoming by the life insurance companies or the legislative remedies enacted which he believed to be necessary.
We may not share Senator Hart's optimism with regard to the likelihood of government functioning in a moral role. Such optimism is clearly shattered by witnessing the stampede of governmental regulartory bodies, the separate state insurance departments, to enact the "NAIC Model Life Insurance Replacement Regualtions." However, if this brief book can claim any inspiration and dedication it is to Senator Philip A. Hart. Certainly, anyone aware of these facts will be less inclined to join in deriding the name of a good man who cared deeply about his fellow human beings and about the quality of our lives.
THE SOLUTION: Buy only TERM LIFE-INSURANCE.
* Selected Quotations (Appendix 1) |
