NU Online News Service, Jan. 3, 5:06 p.m. – Life insurers earned a total net gain of $2.2 million for 2001 on $128 million in revenue from the sale of life insurance policies with small face amounts, compared with a total net loss of $3.1 million on $52 million in small-policy premium revenue for 1997, according to the Texas Department of Insurance.
The percentage of premiums paid out as death benefits increased to 33%, from 28%, while the percentage used to cover other expenses fell to 54%, from 63%, the Texas department says.
The average face amount increased to $4,593 per policy, from $3,517.
The Texas department came up with the data by surveying 191 life carriers that sell policies designed so that the total premiums paid could either exceed the death benefit by 50% at any point, or designed so that the total premiums paid could exceed the death benefit in just 10 years.
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The department conducted the survey to fulfill a 2001 law that requires it to study the state’s small-policy market for the Texas legislature.