On Saturday’s Crash Proof Retirement Show, Phil Cannella and Joann Small discussed the safe haven of the life insurance industry and its role in standing in stark contrast to the risk and rampant volatility of Wall Street.
Unfortunately, mainstream media has little interest or ability in reporting on safe alternatives. “It’s all about securities,” lamented Cannella. “It’s all about risking what you’ve worked for, and in the end, it’s an industry with no fiduciary responsibility.”
In the end, Wall Street is an environment where risk and leverage are king. Accountability and an interest in your individual well-being can be hard to find. The insurance industry stands in stark contrast to this unpredictability. Over its nearly 250-year history, no contract issued by the life insurance industry has gone unfulfilled.
“That’s because the strength does not lie within one insurance institution,” explained Phil Cannella. “Should any single institution go out of business, the entire life insurance industry comes together to form a safety net, and uphold their fiduciary responsibility for the consumer.”
No matter what, the investor will not lose principal from any investment backed by the life insurance industry. “It’s not just guaranteed by the insurance company, it’s guaranteed by the industry itself,” clarified Phil Cannella.
Some financial industry insiders attempt to discourage investors from entering such contracts, by touting the idea that the contract is only as good as the issuing institution. This concept, known as receivership, dispels that myth once and for all. By law, receivership means that a company or institution is placed into custodial responsibility of others, especially in cases where a company cannot meet its financial obligations or enters bankruptcy.
“The industry itself actually protects you,” added Joann Small. “In the securities industry, the other companies attempt to profit off bankruptcies.”
Anytime the news covers a story about General Motors fleecing its bondholders, or Goldman Sachs shorting its own investments—it focuses on a company or entity that’s traded on the stock marker. But that leaves one large industry unspoken for.
“None of you have ever read a headline news item about a life insurance institution stealing your money, or even going out of business and keeping anyone’s money,” summarized Phil Cannella. “The proof is in the pudding.”