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March 30, 2003 at 07:00 PM
To The Editor:
I was pleased to read John Skars article in the March 17 issue about life settlements, not because I agree with most of his comments, but because it is good for agents, brokers and, most importantly, our clients, to have the chief actuary of a major insurer engaged in an open discussion about life settlements.
We do agree on one fundamental point. Clearly, when an insureds health has deteriorated, the poilicy should, in an ideal world, be maintained by the policyowner. Having said that, the reality is policies are not kept in-force. Indeed, Milliman & Robertson estimates that 89.5% of all universal life policies do not mature in a claim.
Given that fact, a life settlement is a good option if the policyowner will surrender or lapse the policy anyway. Rather than lapse or surrender, I think every reader would agree the policyowner is better served by receiving 450% of cash surrender value (Coventrys average purchase price) than the cash value.
With a life settlement, our clients have another option. More options mean a better, more flexible, more responsive product. Simply put, we make life insurance more valuable!
More important than any disagreements we may have, Mr. Skar should be applauded for engaging in the debate. Too many carrier executives, actuaries in particular, have been unwilling to speak on the record. By Mr. Skars participation in an open discussion about life settlements, we are better equipped to help our clients make more informed decisions.
On another topic, Mr. Skar and Mass Mutual should be applauded by everyone for providing outstanding leadership in creating the LifeBridge program. With LifeBridge, Mass Mutual is using life insurance to enhance the educational opportunities for many children with few or no options. If more carriers would follow their lead, the industry could do extremely well by doing enormous good.
