ReliaStar Life Insurance Company Review

ReliaStar Life Insurance Company hasn’t been in business for very long. It hasn’t been an independent company for over a decade. It doesn’t even have its own web site. Yet it remains a major life insurance carrier, acting as a member company of the ING Group. Looking just beneath the surface, one sees ReliaStar as a cog in a very big financial services machine.

ReliaStar Life Insurance Company holds an A rating (excellent) from A. M. Best for financial strength. Other recent third-party ratings for the company include an A- (Strong) from Fitch, an A2 (Good) from Moody’s, and an A+ (Strong) from Standard and Poor’s. Its affiliated companies, ReliaStar Life Insurance Company of New York and Security Life of Denver Insurance Company, hold identical ratings from all four agencies.

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History and Structure

ReliaStar Life Insurance Company was incorporated in Minneapolis in 1985, however its tenure as an independent business was short-lived. In 2000 it was bought out by the Dutch financial services firm Internationale Nederlanden Groep, better known as ING. Today the company exists solely as an ING subsidiary and underwrites much of ING’s life insurance business in the United States.

ING’s history is even shorter, having been formed in 1991 in Holland by the merger of the insurance company Nationale-Nederlanden (NN) and the NMB Postbank Group, a major Dutch bank. NN itself only dates to 1962, when it was formed by the merger of two older Dutch insurance companies. Despite this, the Amsterdam-based ING has grown to be a major player in both the worldwide insurance and banking industries.

Indeed, ING is a prime example of the Bank Insurance Model (BIM) or “Bancassurance” business model, in which insurance products are primarily sold through banking channels rather than through brokers and contracted agents, the method preferred by more traditional insurance companies. BIM was largely prohibited in the United States until 1999, when the Gramm-Leach-Bliley Act relaxed many regulations governing financial services institutions, which in turn led to ING’s entry into the United States market by purchasing ReliaStar.

While ReliaStar Life Insurance Company maintains its corporate headquarters in Minneapolis, it works in conjunction with its sister company, the Denver-based Security Life of Denver Insurance Company. In New York state the company operates as ReliaStar Life Insurance Company of New York. All three companies operate under the auspices of ING North America Insurance Corporation. Reliastar’s broker/dealers for variable products include ING Financial Advisers, LLC of Windsor, Connecticut, and ING Financial Partners, Inc. of Des Moines, Iowa.

Term Life

The following product discussions are intended to be a generic representation of the policies ReliaStar Life Insurance Company offers. Not all products may be available in every state as described. In addition policy features and underwriting requirements may change without notice. Consult with a ReliaStar Life Insurance Company agent for the most up-to-date information.

ReliaStar Life Insurance Company offers term life plans with policy terms ranging from one to 30 years. Its main term life products are in the TermSmart product group, offering plans with 10, 15, 20 and 30 year terms. All policies are available to adults 18 and over and up to age 50, although theshorter term policies may be available up to age 75. The minimum face value on TermSmart policies is $100,000 and may be convertible into permanent life policies if all requirements are met.

Depending on underwriting, premiums are available in both standard and preferred nicotine and non-nicotine classes. Additional available non-nicotine classes include select and super preferred. Available riders include accidental death benefit, waiver of premium, children's term insurance and living benefit.

Universal Life

Like several other companies, ReliaStar Life Insurance Company and the other ING Life Insurance companies have foregone the whole life model entirely, instead offering all of their permanent life insurance products in the universal life model.

ReliaStar offers both traditional fixed universal life (UL) and variable universal life (VUL) policies. The cash value mechanisms of the VUL policies are tied to separate accounts which act in much the same way as mutual funds. These separate accounts are independently managed by third-party asset management companies such as American Funds, BlackRock, Fidelity Investments, the Northwestern Mutual-owned Russell Investments, and the Morgan Stanley-owned Van Kampen Investments.

Annuities and Other Products

ReliaStar Life Insurance Company and its affiliated companies offer a wide range of annuities, including fixed, indexed, variable and immediate annuities. The final three variations are issued separately ING USA Annuity and Life Insurance Company. As its name implies, the fixed annuity is a savings vehicle and insurance policy that guarantees one will not outlive his or her money. The rate of return is modest, but contractually guaranteed.

Although technically a form of a fixed annuity, the indexed annuity has its rate of return tied to the performance of a stock index, most commonly the Standard and Poor’s 500. These annuities typically have a rate ceiling and floor, which means that the rate of return can never be less or more than certain specified amounts regardless of what the stock market does. These products are geared toward those who want a better rate of return than a traditional fixed annuity provides, but aren’t interested in assuming the risk that a variable annuity involves.

Much like a VUL, a variable annuity derives its rate of return from separate accounts similar to mutual funds. While these products traditionally outperform other cash value mechanisms in the long run, because of their sensitivity to market conditions they can lose money and therefore involve a certain amount of risk.

Unlike other annuity forms which usually involve periodic payments over time during their accumulation phase, immediate annuities are funded by a single, substantial lump sum payment. These products can be used at retirement to consolidate several existing retirement plans, as a means to turn an inheritance or other lump sum windfall into a monthly income source, or to convert lawsuit winnings into an income source. In the case of the latter, this setup is often called a structured settlement.

Through its ING parent company ReliaStar Life Insurance Company also offers access to Internet banking and stock trading, non-annuity retirement plans geared towards both individuals and companies, employee benefits, and trust planning and administration.

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