Insurance Quotes & Advice

A recent survey has shown that most companies aren’t using the worst recession in decades to cut employee benefits.  Still a wave of corporate cost cutting in recent years has made pension plans a thing of the past and has many workers worried over the survival of 401k matching in the next few years.

Despite the pressures of the economic crisis, most U.S. companies continue to view their retirement as a vital part of their workplace relationship with employees, even as they struggle to balance cost and talent management issues, says a new industry study.

A survey of close to 500 HR and benefit executives conducted in February by Towers Perrin found that few companies are dramatically reducing or eliminating current benefit plans. While that’s partly a result of a decade-long focus on plan redesign and cost management, the findings confirm the extent to which most companies are staying the course, at least for the present.

Many Americans will likely have to delay their retirement plans if they want to maintain their quality of living in their golden years.  There are millions of Americans who have seen the value of their retirement nest eggs fall by as much as 40% with the recent market decline.

This could explain the sudden jump in popularity recently for immediate annuities.  While most experts agree that there are better investment vehicles out there in terms of return, you won’t find another with the safety and security that an annuity’s guaranteed payment streams provide, that is if your insurance company can stay in business for the duration of your lifetime.

Those who have a few years until retirement will likely see their portfolios recover most of their lost values.  The stock market rally over the past month may not last but it is a good indicator that when a market recovery does take place it can happen fairly fast.

Most industry experts are of the belief that public backlash over AIG’s modified bailout and subsequent scandal over executive compensation has pretty much killed any hopes other insurers have of getting access to government funds from the Troubled Asset Relief Program(TARP).  Life insurers are especially struggling as variable annuities tied to stock market performance as well as their own investments have lost considerable value over the past year.

A number of insurers had purchased small regional banks in the hopes of gaining eligibility to TARP based on statements from former Treasury Secretary Henry Paulson but as of yet no insurer has received any funds from the program and the prospects are looking increasingly remote.  As is the case with their banking counterparts, the number of insurers that will go insolvent in the next few years is expected to rise considerably.

We probably would have seen even more insurers attempt to purchase banks were it not for the fact that it would then place them under the capital requirements as well as the regulatory eye of the FDIC.  What we saw then were those insurers that basically knew they were going to need some sort of government assistance down the road put themselves in that position, however, it hasn’t exactly worked out the way they planned.

For the most part it seems as if a company doesn’t pose a significant systemic risk to the economy, then they are pretty much on their own from now on.  Unfortunately this has many customers worried about the financial security of their policies and annuities.

While all states offer some form of guarantee protection, like the FDIC does for banks, there are many more people with insurance policies and annuities over the limit than is the case with deposits.  Most people expect stability from their insurer and the recent market disruptions has tarnished the reputation for some companies that have been in existence for over a hundred years and has many people wondering if some them will even make it into the next decade.