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Show life Underwriters Charge FTC Staff SALT LAKE CITY - The Utah Association of Life Underwriters Un-derwriters supported charges made by high-level representatives represen-tatives of the life insurance business that a recent study of life insurance by the staff of the Federal Trade Commission Com-mission is a "reckless misrepresentation." j CLIFTON I. Johnson, Bountiful, president of the Utah Association specifically ' accused the FTC staff of "beginning its study of life insurance with fixed opinions , and then rejecting facts to pursue its foregone conclusions; setting out to make it appear that the life insurance business was hid- ing cost and misleading its customers into making poor purchase decisions; adopting the flawed theory that whole life insurance is a hybrid combination of term insurance in-surance and a savings account. ac-count. ' Other accusations are: developing a calculation of interest rates so sensationally low it would shock the public and rejecting analyses by insurance in-surance actuaries that would show otherwise; and inappropriately comparing the whole life insurance contract con-tract with other forms of thrift." "WE BELIEVE that the life insurance business representatives represen-tatives who answered the FTC staff report before the senate commerce committee in Washington, D.C., on Oct. 17," said Mr. Johnson, "were absolutely correct when they characterized It as 'misleading 'mislead-ing and erroneous', resulting in misunderstanding and even misuse. "Additionally, we believe that the president of our national na-tional association, who was one of our industry witnesses at the committee hearing, was on the right track when he called on the committee or FTC to take appropriate action ac-tion to set the record straight." ADDRESSING the FTC staff claim that the whole life policies had a "savings account" ac-count" element with a yield of 1.3 percent and, as a result, policyholders "were losing billions of dollars annually," Mr. Johnson declared "if the FTC staff had made its calculations cal-culations with reasonable assumptions, as-sumptions, the result would have been 5.9 percent instead of 1.3 percent." Other key points made by the life insurance business, noted Johnson, include: - THE BUSINESS strongly supports life insurance cost disclosure, particularly the method endorsed by the National Na-tional Association of Insurance In-surance Commissioners and which has been adopted by 28 states and is being used in at least 60 percent of life insurance in-surance sales situations. - The FTC staff persists in the notion that term insurance is superior and more suitable for most people than whole life, whereas the fact is that individual needs, objectives and ability to pay determine the type of life insurance to be purchased in each individual situation. - THE FTC staff report has caused and will continue to cause confusion and misinterpretation misin-terpretation in the life insurance in-surance marketplace, with people who have a commercial commer-cial interest in replacing policies already using the FTC s'aff repc-t as an argument ar-gument to get consumers to switch their coverage a decision often not in the consumer's con-sumer's best interest. - Even while the FTC staff report would lead people to buy term insurance, the Veterans Administration recognizes the danger of over-reliance on term and is vigorously campaigning to persuade holders of National Service Life Insurance to convert their term insurance to whole life with its level premiums. "THE FTC staff report on life insurance is so off-base and one-sided in its conclusions," Mr. Johnson said, "that we can only conclude its hidden purpose was to demonstrate the need for federal intervention by discrediting state regulation of cost disclosure." |