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About The Battalion. (College Station, Tex.) 1893-current | View Entire Issue (April 23, 1982)
national Battalion/Page 13 April 23, 1982 5 IN PRINT, i L YlWnifi 'P1E.ME Vf |$1(1 . 0 «,I«OT|( WTtm iWhole life’ consumers, policies rob expert says R United Press International CHICAGO — The tradi tional “whole life” insurance policy robs customers of thousands of dollars in re turns and its popularity is de clining in the insurance mar ket, the president of a Min neapolis-based insurance Firm ys. PRobert MacDonald, 39, president of FI T Life Insur ance Corp., said his Firm no longer offers “whole life” — ipiiirance with a specified deatli benefit and premiums S which remain the same throughout the life of the policyholder. ■ Instead, he said, ITT urges ■ customers to buy much r cheaper term insurance — •eptember.ikMerage for a speciFic projecthadi flm ount with premiums that i, a GAOrcincrease with age. It also urges em to invest the money they in annuities or other ncies idem! tancial instruments which having hii airn far more than the 3 uded the I srcent to 4 percent that in- ithority.witt ranee companies pay on whole life policies. “Whole life was designed 75 or 100 years ago and it hasn’t changed much since then,” MacDonald said. “There’s nothing wrong with the concept and it was a reasonable deal when banks were paying 3 percent on sav ings accounts and the prime (interest rate) was 5 percent.” The problem of whole life- for the consumer — and its attraction for the traditional insurance firm — is that policyholders pay more in their younger years than actuarial tables would require. The companies pay only the fixed rate of return on the ex cess but are free to invest the money at the best rate they can find. “That’s wdiat’s built all those buildings and paid for all those agents,” MacDonald said, “It’s great for the com panies but when inflation and interest rates are where they are now, it’s just not a good product. The consumer de cided this a couple years ago.” In 1970, he said, 70 percent of the life insurance policies sold in the United States were whole life. In 1981, that type of policy made up only 47 per cent of total sales, he said, de spite a range of powerful in centives built into the system urging agents to sell whole life policies. By switching to term life, the customer can pocket the difference in premium, in crease his coverage as much as Five times, or instruct the Firm to invest the diFference in a more profitable way, MacDo nald said. He said a growing prospect for the future is the “universal life” policy which w ill let the policyholder share in the in vestment proFits of the com pany. Eventually, he said, such policies will be offered with different investment op tions. “It could be literally any thing from diamonds to soy beans,” MacDonald said. He said many of the large, established life insurance firms are Fighting the move away from whole life — be cause it is so profitable, be cause they have to protect their agent network and be cause the very concept of “whole life” as opposed to term insurance has acquired an almost religious mystique. “I’ll give you an example of what a religious thing this is,” said MacDonald, who sold whole life for 15 years. “When an agent changes a policy from term to whole life, he comes back to the office and says, ‘I converted Bill Smith.’ Everyone knows what he means — he turned a term policy to a whole life policy. “But when it goes the other way, he’s ‘twisted’ the policy and done something bad.” He said his combined pro duct of annuity-term insur ance seems to be doing well in its early stages. Missouri ‘Main Street’ shooting to be probed United Press International SKIDMORE, Mo. — Several residents in northwest Missouri will testify next week before a Kansas City federal grand jury about the death of Kenneth Rex McElroy, who w f as gunned down before a crowd on Main Street last summer. About 10 FBI agents were in Skidmore this week questioning residents about the shooting death of McElroy, Special Agent Max Geiman said Thursday. A grand jury is to convene in Kan sas City Monday. McElroy, 47, was shot to death July 10 as he and his wife, Trina, were getting into their pickup truck outside a tavern in the tiny farming community. The 260-pound man was dis liked by several people in the town as he had a history of ter rorizing a large area of north west Missouri. The postmaster of Skidmore, Jim Hartman, said he is to testify Thursday before the jury. He said that his subpoena did not mention the specific case, but that he assumed it concerns McElroy. Something about civil rights was mentioned on some of the attached papers, he said. Despite an extensive investi gation, no charges have been Filed in the slaying. McElroy, a sixth-grade drop out who could neither read or write, had been charged with attempted jailbreak, arson and rape. The rape charge was even tually dropped when he married the supposed victim. UNEXPECTED PREGNANCY • free pregnancy testing • abortions to 20 weeks • confidential counseling • total gynecological care Metropolitan Gyn Group P.A. 6400 Sv/Frwy. 713-784-8665 PROFESSIONAL SERVICE & REPAIR Foreign & Domestic TOTAL PERFORMANCE AUTOMOTIVE SERVICE CENTER 696-3775 FULL CAR CARE • Air Conditioning • Tune Ups • Brakes • Charging Systems • Engine Rebuilding OWNER J. BITTLE ATM 78 Sae Parts 4 Pattcan a Wharf * 1800 Welsh A S.W. Pkwy. 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