When the global economic meltdown began among the industries that claimed that they have been affected by such are the insurance and pre-need companies. As an educational and life insurance plan holders I am really afraid of what will happen now to my plans given the bad turn out of the economy. I have seen plenty of plan holders crying on TV asking for the refund of their money but to no avail. I pity those thousands of parents who opted to invest their hard earned money for the education of their children and now it is gone with the wind.
In regard with the issue of educational plan the problem centered on those active traditional plans. With a traditional educational plan, the plan holder will pay a certain amount for a specified term so that the beneficiary will benefit from that paid plan. What happened was that the cost of education increased at an amount they never anticipated to be. Given the continuous increase in the cost of education, that fact made those pre-need companies unable to pay back the beneficiaries with the amount as stated in the contract.
Was the problem only laid on the global economic meltdown that happened? Or there are shortcomings also on the part of the pre-need companies as to how they invest the funds and the lax of government agencies that are tasked to monitor the welfare of the plan holders?
It is I think fortunate for us that we got a "Money for Money" educational plan for our eldest from a pre-need company affiliated to hubby's company. In this kind of plan, it is not based on how much is the current cost of education. It is based on how much a plan holder would want his/her beneficiary to receive in the future and it is where the plan will be based. There are different contract prices to choose from which are payable in years. Included also are some monetary features like a certain annual percentage increase of the plan, transportation allowance, monetary gifts upon graduation and topping a certain board/bar exam.
The amount of educational plan in a "Money for Money" scheme has a pre-determined monetary equivalent forecasted in advance. It is a lot easier for pre-need companies to give back to the plan beneficiaries what due them as compared to a traditional one. But it is still safe and secured if the pre-need companies and the involved government agencies to work hand in hand to ensure that the beneficiaries will receive what due them for whatever type of plan they are holding.
News articles related to this issue:
Pre-need companies loosing money
Revenge of planholders
Revenues of pre-need firms down by 45%