Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, April 8, 1991 TAG: 9104060088
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: Mag Poff
DATELINE: LENGTH: Medium
We have all our savings in insured CDs in one bank. I have read in your column that you cannot have more than $100,000 in one CD or bank and be insured. We bought these CDs two years ago at 10 percent for five years. The bank said each one would be insured up to $100,000 if they were issued in the following manner: wife or son; husband or daughter; husband or wife or second daughter. Would you please let me know if these CDs are insured this way? If we do anything with them now, I am sure you realize what we will lose.
A: All of your accounts are insured because they are in different names. The $100,000 insurance ceiling applies to money held by a single depositor. You have no reason to give up such an attractive rate, much less to pay a penalty for early withdrawal.
You might want to consider alternatives when the certificates come up for renewal in three years.
One reason is that Congress, in proposed bank reform legislation, is considering changing the deposit insurance law and might even make it retroactive to existing accounts. Suggestions have been made to limit insurance to $100,000 per person or to all of a person's accounts at a single bank. These are just proposals. But you'll want to stay informed.
More importantly, joint bank accounts might be considered current assets of your children. Joint accounts also will pass outside your estate. You obviously trust your children, but suppose one of them gets into financial trouble and his or her creditors come after the account. What will happen after one of you dies? How strongly will the money tempt the co-owner, and do you want one child to inherit ahead of the others? What would happen if one of the children should die before one or both of you? You might want to discuss these questions with a lawyer and coordinate handling of the accounts with your wills.
Information at premium
Q: I am having a problem concerning an insurance policy with Continental Assurance Co. of Chicago. This policy was taken out in 1953 with premiums due quarterly. However, there has been no premium notice since September 1990 nor has there been any reply to my letter of inquiry. Any information that you could give me as to whether this company is still in operation, or where I might seek further assistance concerning this matter, would be most appreciated.
A: Continental Assurance, a CNA company, is in good standing with the Virginia Corporation Commission and the Illinois Department of Insurance. But Continental proved uncooperative with both the newspaper and its insureds despite repeated contacts.
It turned out that the policy you questioned was issued nearly 38 years ago as home mortgage life insurance. When the mortgage was paid off, the insured couple accepted an offer to convert to a straight life policy with a face value of $1,500. They figure they have paid that amount in premiums over the years.
Although we apparently have put the parties in touch with each other, Continental declined to discuss the situation with the newspaper.
A company official told the couple that it sent the quarterly billing on schedule and, when no reply was received, mailed another notice with a warning of cancellation. The official said no payment was received, so the policy was allowed to lapse.
The couple said they never received any notice and had no reply to the letter they wrote. They had been expecting the bill and were waiting for it.
Continental said it would settle by paying half the face amount, or $750, immediately. The couple accepted the offer, and they prefer to avoid the trouble of protesting to the state.
Anyone in a similar situation can protest by writing a letter setting forth all the facts to the State Corporation Commission, Bureau of Insurance Consumer Services, P.O. Box 1157, Richmond, Va. 23209. Copies of all relevant documents should be enclosed.
by CNB