The Equitable Life | Equitable Life With Profits Insurance Company

The Lessons Of Equitable Life

The Equitable Life was a fantastically respected and successful insurance company. Politicians, large pension funds, The Equitable Life With Profitslawyers and accountants all used Equitable Life as their preferred insurer for their investments, plans and pensions.

Equitable had a compelling selling point: they didn’t pay commission to advisers or middlemen.

Actually many intelligent people who liked this particular point seemed to forget that Equitable had a very large sales force and didn’t bother to question how they were paid!

As with any event of this type it is easy to be wise after the event and to have great insights years later which are obvious in hindsight. We don’t want to fall into this trap.

Equitable collapsed for one very good reason above all others: they could not sustain the guarantees they had made in earlier years. The guarantees they made to policyholders, which were a key reason why people bought the policies, could not be sustained years later when market conditions changed very rapidly.

We don’t want to add to the acres of paper that have been taken up with commenting on Equitable Life except to point out the following lessons that investors should bear in mind:

Don’t think any company is above suffering problems.
A “good” company is only as good as its figures and numbers.
Beware guarantees, whilst they may sound attractive, they may not be sustainable.
Don’t be scared to exit a company, even with a loss on your money, if warning signs suggest impending problems. Many policyholders had the chance to get out of their Equitable Life plans before the problems really hit, but just didn’t think Equitable could get into trouble.
DON’T PUT ALLYOUR EGGS IN ONE BASKET. Many high reputable, intelligent people had all their savings in the one company: creating exceptional problems for themselves when Equitable went belly up.
If a deal or a plan sounds too good to be true……………………………..
If a company doesn’t pay commission to a middle man ask yourself who they are paying commission or wages to? Commission is just another form of remuneration and doesn’t make a situation uncompetitive or bad value. The opposite is also true.
Finally, assume a company you have money with goes bust, what is your protection under the eyes of the law? Many of the Equitable Life “rows” are still going on and many policyholders are still awaiting decisions on what will happen to their money.

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