I went home to Kansas City this past weekend for my parents’ 50th wedding anniversary and learned something amazing: Back in the 1970s, my dad’s travel agency used to hire Daniel Akaka, who later became a U.S. senator from Hawaii, to play the ukulele for tour groups.
I also talked to a life agent who has been in the life insurance business since, basically, forever, and that was a sobering experience.
He said that he is still in the life business mainly to help longtime clients deal with the reality that the products he sold them — interest-sensitive life policies — didn’t work the way the insurers told him they’d work.
The interest rates life insurers earned on the investments backing the policies proved to be much lower than expected. Crediting rates were lower than what the insurers had predicted. Premiums that were supposed to vanish failed to vanish, and, eventually, death benefits that were supposed to be guaranteed, or all but guaranteed, vanished.
It would be easy to blame the life insurers, and, of course, plenty of organizations that bill themselves as being consumer groups will do just that.
But, let’s face it: The problems with the interest-sensitive insurance policies are the exact same kinds of problems plaguing defined benefit pension plans, Social Security retirement benefits, Medicare, private long-term care insurance, and really, pretty much every kind of public or private mechanism that was supposed to help the working people of the 1960s, 70s and 80s enjoy their old age.
All of the people who have reached “old old age” in the United States in recent years have been members of the “Greatest Generation” — born from 1901 through 1924 — or members of the “Silent Generation” — born from 1925 through 1945.