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.

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.

The department also held a series of four public hearings on the small-policy market.

The hearings showed that consumer activists and insurance industry representatives disagree as strongly as ever about the need for new regulations of the small-policy market, the department says.

Consumer activists say poor customers get too little value from the money they pay for the policies, but industry representatives say the real reason some insureds pay more in premiums than they get in benefits is longevity.

The industry representatives argue that increasing restrictions would simply make it harder for poor Texas residents to buy coverage.

The text of the department’s report is available on the Web at http://www.tdi.state.tx.us/general/company/salirpt.html