Copyright (c) 2008 Bill Broich

In this day in age where the financial markets are in disarray and the future of so many people's money is in doubt why would the government want to make it a rule (a punishable offense) to not allow the industry to inform potential customers of a safety net?

How can this make any sense? Our banking institutions have a safety net. It is called the FDIC and it is proudly displayed on fixtures, the front doors, desks, tables, stationary and websites. Anyone who does business with a bank knows what the FDIC stands for...it stands for security and guarantees and insurance protection. It creates piece of mind and allows for depositors in the banking industry to be free of fear. The underlying guarantee is backed by the full faith and credit of the United States Government. Your funds are guaranteed and will always be safe.

How about Credit Unions? The funds in your credit union are insured by the National Credit Union Share Insurance Fund. (NCUSIF). This protection was established by Congress in 1970 to insure member share accounts at federally insured credit unions. All federally insured credit unions proudly proclaim this insurance and make certain you know that your funds are safe. Guarantees, safety and security is their mantra and they want you to be aware of it.

How about stock brokerage accounts? What insurance is available to their investors? The protection in place is called Securities Investor Protection Corporation which was created by congress in 1971 to insure that any brokerage house that would become insolvent due to regulatory issues or bankruptcy would protect investors from missing assets such as securities. Without SIPC an investor could possibly lose their securities or money or be tied up in lengthy court actions. The letters SPIC are promptly displayed on all participating Securities Firms on their doors, furniture and on most correspondence. This insurance gives the investor peace of mind regarding access and availability to their funds and assets.

How about insurance companies? Life insurance and annuity products? It seems the government does not want you to know about their guarantees and the question is why? Why don't they want the consuming public to know about this "secret security net?" Each state participates in these guarantees and it is known as "The State Guarantee". This guarantee is in place to help and assist policy owners in the event of insolvency of an insurance company to provide funding and liquidity. Coverage and protection is generally for individual policies and the limits of protection will vary from state to state.

Here is the unbelievable part: most states will not allow an insurance agent to tell their prospects about this underlying guarantee until AFTER they have decided to purchase the insurance product. Insurance agents are not allowed to post the guarantee on their doors, furniture or correspondence. Advertising is strictly prohibited and yet the question still remains....Why?

Banks, Credit Unions, Stock Brokerage Firms can all advertise, discuss, display and market their guarantees and yet insurance agents and companies are prohibited. Insurance agents must never use this information to induce a sale and yet who would ever make a deposit in a bank without asking about FDIC?

The question remains still unanswered. Why is this guarantee not being made available to people who are considering an insurance product? How can banks and other institution advertise this guarantee and not insurance agents?

In this time of great financial stress would it not be comforting for a prospect to know about this safety net? The protection along with the great contractual guarantees would make them more likely to buy an insurance product and a bank product; it seems that way to me anyway.

Maybe I have answered the question myself......


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Bill Broich helps insurance agents generate annuity leads and sales. http://www.annuity.com