William Penn Life, 1985 (20. évfolyam, 1-6. szám)
1985-11-01 / 6. szám
Even though the danger SEEMS to have passed for this year, we urge you to remain alert to the hazard and to act if it arises again next year. Keep your bats in hand — and watch out for beanballs. Continued from page 3, column 5 ACTUARIAL COMMENTS Bruce and Bruce Company “INSIDE BUILDUP’’! This phrase does not refer to anything so innocuous as the accumulation of excess calories. Quite the contrary. Instead, it is the rallying cry of a movement that could destroy American fraternal societies and life insurance companies. We think that you, as a William Penn member, should be made aware of what is going on. "Inside buildup” refers to the accumulation of cash values within an Ordinary life insurance certificate or policy. Except on certain term insurance plans, these cash values are required by state laws; they are incidental to the main purpose: money for the beneficiary when the insured dies. Yet there have always been some people who insist that these incidental cash values are really investments. Now these I people have potent new allies: the Federal Treasury Department and President Reagan himself. The latest proposal (“Treasury II” or “Reagan I”) would tax the increase in cash values each year as ordinary (investment) income. It would do so even if you, the insured, never touched the cash value. You would have to pay tax each year on “income” never received. The “income” to be taxed would be: 1. The year’s increase in your cash value, plus 2. The cost of one-year term insurance, plus 3. Any dividend, less 4. The premium paid. In a typical case, there would be no tax in the first couple of years. After that, the taxable “income” would increase every year and would eventually exceed the premium that you pay. As a result, we fear that people would no longer be able to afford cash value life insurance. Instead they would have to rely on term insurance, where the premium increases with age and becomes prohibitively expensive at the older ages, just when death becomes most likely. We doubt that any fraternal society could survive on term insurance alone. Since little if any insidebuildup tax would be paid during the first few years, fraternal societies would in our opinion die by slow strangulation (rather than abruptly) as the business in force when the law takes effect gradually shrinks away. Nonetheless, we think they would eventually die. Besides the increased cost of Ordinary insurance due to your personal tax, other aspects of the bill would raise costs and taxes of societies and life companies. Just calculating the inside buildup every year for every affected insured and annuitant would, all by itself, create a bookkeeping nightmare whose costs would need to be passed along to the insureds and annuitants. Cash value life insurance, which has so well served American people and financed America’s economic growth, would shrivel if not die completely. ★ * * Deferred annuities (other than tax qualified plans) would be treated in the same way. The inside buildup of cash values toward retirement would be taxed each year as ordinary income. WPA and its members can make a difference. The recent experience of WPA President, John Sabo, in Washington is a case in point. Many WPA members may not be aware that there was a strong movement to require fraternals to pay federal income taxes. This additional expense would have reduced dividends to members. Mr. Sabo was amazingly effective in convincing Mr. Buchanan that such taxation would be a mistake. Mr. Sabo was the first to get the message that the government had changed its position and would not tax the fraternal societies. Now the proposal is to tax the individual members by taxing the buildup of cash values. Congress will listen to WPA members. If you would like to avoid this tax, voice your objections. What can you do? First of all, if you have been putting off buying a life insurance or annuity certificate, buy it now. Today. In its present form, this tax bill would exempt certificates issued prior to the date the provision is adopted by EITHER the House or the Senate. So act now. If either body passes this bill tomorrow and it eventually becomes law, today is your last day. Second, if you agree with these opinions, say so to your Congressman and to both of your Senators. Phone or write. Better yet, do both. THE UNDERWRITER By ERNEST S. BENDZSUK Chief Underwriter The Home Office Underwriter has a triple responsibility, namely: (1) The Applicant is entitled to sympathetic consideration that is intelligent and open-minded; (2) The Agent must receive every possible policy; (3) The Association must be protected. The Underwriter must know past experience, current personnel and future trends. In this manner, he can assess each risk adequately in all its phases. When all necessary information is received, the Underwriter must interpret it and determine the dependability of each source. Did the Applicant honestly forget to mention a hospital confinement or treatment for some health condition? Did the Agent make every effort to develop all of the necessary information from the Applicant? Did the Agent submit high grade business? If an inspection report is required, did the inspector make a careful investigation? For medical examination reports, did the exaTniner guess at the weight of applicants, especially when overweight is obvious? Does the examiner reveal cause for reported health conditions? The Underwriter must, to some degree, know human nature, otherwise he is faulty in interpretation of the data submitted. To assume a proper responsibility to Applicant, Agent and the Company, the Underwriter must have some independence, he must have courage and he must have openmindedness. When a certain or given risk is classified into a certain group, the Underwriter is predicting kind of mortality that will be produced in that particular group. However, if there is an early claim, there will be people who will say the Underwriter was mistaken. There wiH be some who will be convinced the Underwriter erred if the insured lives to the end of the mortality table. Despite these convictions, the Underwriter, must when making decteions, produce mortality results corresponding with his or her expectations. Decisions must be made as soon as possible so that the Agent will not have to resell the insurance. If too much time is given to the decision making, it is possible the Applicant will take a policy with another company. Although an Underwriter is employed by a company and management is thinking profits while the Agent is concerned about his commissions, the Underwriter should not favor one over the other when making a decision. Medical science has improved to the point where certain risks are now being con-Someone once said “People really have an inherent need to share their lives, to do something for others.” It seems appropriate that such a thought be applied to the Missionary Sisters of the Most Sacred Heart of Jesus who have dedicated 62 years of their religious life at the Knights of St. George Home for the Aging in Wellsburg, West Virginia. It all began on May 8, 1923 when four sisters from the Motherhouse in Hyde Park in Reading, Pa., arrived in Wellsburg to begin their task of dedication and love to the wellbeing of the aged. This marvelous work of the Lord would not have been possible without their wonderful and generous service of doing something for others. In some ways it was the beginning of a new era in people caring for people. Homes for the care of the aged were not all that many in number in those early years. Only now is more and more emphasis being placed on caring for the aged. The Knights of St. George Home in Wellsburg has been privileged over the years to be staffed with ten nuns from the Order of Missionary Sisters, a German Order that maintains Motherhouses in Hiltrup, Germany and Hyde Park in Reading. The multiple chores involved in the home range from cooking, cleaning, nursing and laundry work to secretarial work. Sisters presently assigned to the home include Sr. Febronia, the superior; Sr. Hildburg, Sr. Richard, Sr. Bernhilde, Sr. Stephana, Sr. Gertrude Marie, Sr. Bridget and Sr. Edna. Srs. Marie, Bridget and Edna are our latest newcomers. Sr. Marie has been a member of sidered. Studies are constantly being made relative to risk appraisals which should benefit especially those who are now classified as high risk. Experimental underwriting is being performed by some companies but on a limited basis at the present time. This type underwriting eventually results in offering coverage to those formerly declined. The Underwriter should be sympathetic and open-minded. He should appreciate the problems of the Agents, the rights of the Applicant and keep in mind the interest of the Association. the Missionary Sisters for 50 years. Sister Edna Averbeck Sister Bridget Ulicny Sr. Bridget Ulicny joins the staff after interesting assignments that included residency in Rome, Italy. She is a native of Bethlehem, Pa., a teacher by profession and one who taught in the elementary and high schools in the diocese of Philadelphia and Allentown. She received her bachelor of arts degree in education from VHIanova University and her masters degree in business education from Catholic University of America in Washington. She served the order as general councilor from 1960-1966, residing in Rome. She was provincial superior from 1966 to ComUnued on page 5, column 5 Sister Edna Averbeck Sister Bridget Ulicny 4
