Fraternity-Testvériség, 1992 (70. évfolyam, 1-4. szám)

1992-10-01 / 4. szám

J_i

FRATERNITY

Page 15

According to our Annual Statement for 1991, the Federation has unassigned funds of $7,895,919. The unassigned funds increased by $248,277 in 1991 and by $380,091 in 1990.

These funds have been accumulated from premiums paid by members and from investment earnings on assets during all of the years in which the Federation has been in business. Since the Federation is truly owned by its members, it can be properly said that this equity in the Company belongs to the members. It does not truly belong just to the current members. All of those who were members in the past, whether now dead, having policies which matured, cash surrendered or simply terminated with no value have contributed to these accumulated funds in some measure.

A study should be made of the possible future needs for these unassigned funds. If the Board were to decide on payment of dividends, a policy should be established to control the payments. This policy would be aimed at maintaining adequate unassigned funds for such future needs as may be projected.

It is customary for payment of dividends to be offered in several ways, only one of which is payment in cash. In addition to payment in cash dividends may be left on deposit with the Company to accumulate at interest in a form of a sort of bank account, they may also be used to purchase additional paid up life insurance.

Dividends for “Old” Whole Life Policies: It would be a bad practice to establish dividends for any specified class of policyholders without giving consideration to dividends for all classes.

B) Whole Life Policies to be paid up at age 80.

In December 31, 1991, there were more than 2,600 Whole Life Policies in force with the Federation. There would be a two pronged effect if they were made paid up age 80. First, there would be an immediate loss of premium income from those members who are already beyond age 80. Second, the reserves on all of these policies would have to be increased to reflect the fact that they are being changed from Whole Life to Life Paid Up at 80. If all such policies are to be made paid up at age 80, consideration would have to be given to providing those policyholders with the cash surrender values, and other values, appropriate for Life Paid Up at Age 80 policies. Computing such values and sending them to the policyholders would involve substantial expense to the Federation.

C) Introduction of Long Care Policy and Accelerated Death Benefit Provisions in Life Policies.

Long Term Care Policies are a very high risk form of insurance. Data for calculating rates is scarce. That means that rates for these products are speculative.

These products are highly regulated. There are regulations governing the content of the policies and the percent of the premium which must be paid out in claims. There is a great deal of paperwork which must be filed by the Company if it issues such policies. If the Company did decide to offer these products, it is recommended that it defer any possible action of dividends because of the possibility of loss arising from these products.

Based upon the presentation of the Actuary, the following resolutions were passed by the Convention:

THAT THE UNASSIGNED FUNDS OF THE FEDERATION SHOULD BE USED IN THE MOST EFFECTIVE MANNER POSSIBLE. INSTEAD OF REDUCING THE UNASSIGNED FUNDS FOR DIVIDENDS, WE SHOULD INVEST OUR UNASSIGNED FUNDS IN EDUCATING, DEVELOPING AND TRAINING OUR SALES FORCE. IN ADDITION, WE SHOULD INCREASE OUR FIELD SALES FORCE TO PROMOTE NEW BUSINESS AND SUBSTANTIALLY INCREASE OUR MEMBERSHIP TO ENSURE THE CONTINUATION OF OUR ORGANIZATION. IT WOULD BE IN THE BEST INTEREST OF NOT ONLY OUR ORGANIZATION, BUT THE SALES FORCE AS WELL, THAT THE FIELD FORCE BE ENCOURAGED TO ENROLL IN THE FRATERNAL INSURANCE CERTIFICATE (FIC) PROGRAM.

TO PROCEED WITH THE DIRECT BILLING; IN- HOUSE COMPUTERIZATION, AND TO TERMINATE THE CANADIAN OPERATION.

THAT THE CONVENTION RECOGNIZING THE NEGATIVE SIGNS EVOLVING FROM THE DECLINE IN MEMBERSHIP AND CONSIDERING THIS TO BE THE MOST IMPORTANT ISSUE CONCERNING THE FEDERATION, URGES THAT THE BOARD OF DIRECTORS ACTIVELY PROMOTE THE INCREASE IN THE MEMBERSHIP OF THE FEDERATION.

THAT FEDERATION MEMBERS SHOULD BE NOTIFIED THROUGH THE FRATERNITY THAT IF THEY DO NOT LIVE NEAR THEIR BRANCH OF MEMBERSHIP, THEY MAY TRANSFER TO A BRANCH CLOSER TO THEIR RESIDENCE. IF ANYONE WISHES TO TRANSFER HIS/HER MEMBERSHIP TO ANOTHER BRANCH, THEY SHOULD MAKE THEIR WISHES KNOWN TO THE HOME OFFICE.