Friday Afternoon Dreams

Friday, June 24, 2016
I'll take "Wishful Thinking" for $400, Alex:

Amusing Vendor Tricks

So, a couple of weeks ago I posted on a (new?) insurance funding product called HMA (Health Matching Account). I was mildly critical of it, primarily because the folks pushing it were working very hard to conflate it with tax-advantaged Health Savings Accounts.

They've also been pushing it pretty hard on LinkedIn, which is fine, of course,  but now they've added FSA (Flexible Spending Accounts) to the list of vehicles their product can replace. Of course, HSAs and FSAs are officially IRS-approved, tax-advantaged vehicles, while HMAs are not. Which is not to say that the product itself is necessarily evil (or even fattening), just that the marketing thereof is, well, questionable.

When I called them on this at LinkedIn, I was greeted with a barrage of derogatory comments and threats from their Marketing Director to "expose" me as "a paid troll. His articles can't be trusted because he ignores all that is true to chase a buck.. I will troll his all his post [sic] and expose this quack!"

Seems like I got under someone's skin.

Which gives one pause to wonder why, no?

Settling for Life

We've written before about viaticals, which are generally used by folks with end-of-life financial needs. But there's another, related strategy called life settlements:

"The insured had a $300,000 term policy that was also at that end of the level premium paying period and conversion period. When he called his agent to drop the policy because he no longer needed the coverage, the agent said, “Before you do, let’s see if there could be value in the secondary market.”

That is, the client had no particular health issues, but no longer needed the plan. Since life insurance is property, it can generally be sold. In this case, the client saved the annual premium and picked up an easy $5,000.

Which sounds great, and far be it from me to pooh-pooh anyone coming into a windfall. But I also have some major reservations about mentioning this "secondary market." It's not that I have any particular ethical qualms; after all, it's my client's policy, so why should I care? It just feels ... weird to bring this up.

So I reached out to some colleagues for their thoughts; FoIB Brian D immediately pegged it for me:

"I also fear how it would be received. Would it poison the well right before finalizing a sale."

Exactly. Now, perhaps this makes sense after the application has been approved, as a way to help the client pick up some extra cash now that their new plan is in place. And to be fair, this may well be what the folks who wrote that article do, as well, but it's just not explicitly noted.

And full disclosure: here in Ohio, agents are allowed to help make, and receive compensation for, these arrangements.

Something to consider going forward.

Thursday Insurance Conundrum

Thursday, June 23, 2016
Good question:

Waivin' in the wind

We've written before about group plans suspending spousal coverage, or applying a penalty to employees whose spouses have access to coverage through their own employers. It's a way to reduce overall health insurance spending, to be sure, but it comes with its own set of problems.

Over at Benefit News, Zack Pace takes a look at how this practice affects real people, and how it continues to grow:

Zack takes a page from our own experience, and writes about a young lady who's reached out to him for advice. It's compelling, disturbing, but quite insightful.