Information On Life Insurance

The successful management of a life insurance company is not a simple undertaking, since all the factors mentioned above join up. Consider what might happen if a particular misguided company were to cease requiring medical examinations for people of middle age taking out substantial whole-life insurance policies (where premiums are payable throughout life). All over the country, professional advisors faced with overweight clients in sedentary jobs with general poor health would quickly steer them to this company where they would be able to take out policies for which any other company would charge them far more highly.  

The careless company could wake up three years later when the actuary did his sums and discover that its claims were far higher than predicted because it had taken on a lot of higher than average risks and that the assets acquired by the premiums of policyholders of this class were insufficient to meet the expected liabilities. All the company could do at this point would be to adjust its premium rates upwards for the future new business and transfer funds from its reserves to cover the life insurance claims. Such a transfer would be at the expense of either the shareholders in the company or the policyholders, or both.

The general trend in life insurance over the past two decades has been towards greater sophistication in the investment oriented policies, which have been refined and adapted to or to be “tacked on” when an investment oriented policy is sold. Unfortunately this runs counter to the needs of many people, but we are now starting to see protection policies advocated on their own merits. Since the administration costs of all policies are more or less equal (in terms of documentation, registration, etc.) many companies argue with some justification that the “package” is a more economical way for the individual to buy life insurance, especially if the premiums are low. But in some cases (especially when the premiums are larger) the individual can get better value by purchasing the protection and investment portions of the package separately.

Tags: life insurance, life insurance cover, life insurance quote, term life insurance

This entry was posted on Friday, November 7th, 2008 at 11:16 am and is filed under Life Cover. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.