First Round Of Texas Survey On Small Face Amount Policies Unveiled
A sketch of small-face amount policies in Texas and claims being paid out to Texas policyholders is starting to come into focus, the result of an initial survey by the Texas Department of Insurance.
The survey, released last month, found that the average death benefit for industrial policies was $575, compared with $4,248 for debit ordinary contracts, $2,789 for pre-need policies, $6,324 for other term contracts and $5,057 for other whole life policies.
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The findings are results from 172 companies that had policies of $15,000 or less in death benefits still in-force in Texas as of Dec. 31, 2001.
The survey is required under Texas H.B. 2415. A final report must be submitted to the Texas legislature by year-end 2002.
The requirement is part of a wave of national concern that contract holders of small face amount policies, typically defined as policies with face amounts of under $15,000, were paying premiums in excess of the face amounts on their policies.
The survey also indicated wide divergences in benefits paid in relation to premiums collected for individual product categories.
However, Mike Boerner, managing actuary with the department, cautions against reading too much into those often large discrepancies.