Close Close
Popular Financial Topics Discover relevant content from across the suite of ALM legal publications From the Industry More content from ThinkAdvisor and select sponsors Investment Advisor Issue Gallery Read digital editions of Investment Advisor Magazine Tax Facts Get clear, current, and reliable answers to pressing tax questions
Luminaries Awards

Life Health > Life Insurance

Fool's Gold

Your article was successfully shared with the contacts you provided.

The headline above describes how I feel about the glimmers of “evidence” being put forth by some economists and commentators that the Great Recession is starting to wind down and could be history by year-end.
All these signs that are noted as signs of hope are on the macroeconomic level, however. And while, literally, it may be true that two consecutive quarters of GDP growth mean we’re out of the recessionary woods, in this case the macro signals mean squat.
Flash to the ivory tower: The recession is very much alive at the micro level.
It just goes to show that you can use statistics to prove anything you want.
This is also playing out in the great debate over healthcare reform where the same statistics are often used to reach opposite conclusions.
Thus, one faction will emphasize that 85% of the population is covered by health insurance and there is no need—pressing or otherwise–to change a system where so many are covered.
The other side will respond with the fact that 15% of the population is around 47 million people who aren’t covered and that this kind of situation is untenable in a country like ours.
The response to this–and believe me I know because any time I mention the 47 million I get the same response—is that of course there are not 47 million people uninsured and that once you take out the illegal immigrants, the young people who can’t afford health insurance, the rich people who won’t buy health insurance and other assorted groups, you are left with around 2 or 3 million who are really uninsured.
(I didn’t really intend to get into the healthcare reform quagmire in this piece, but there’s no avoiding it, it seems.)
In any case, one set of statistics that doesn’t lie came out from LIMRA International the other day and had to do with individual life sales in the first six months of this year. They would seem to provide pretty strong proof that the recession still has quite a way to go.
The headline of LIMRA’s release read in part: “Steepest Six Month Drop in Individual Life Insurance Sales in Almost 70 Years…”
Yes, Virginia, that means since 1942.
Individual life annualized premiums were down 23% in the six months, with some product lines down considerably more than that. You don’t have to be Sherlock Holmes to come to the conclusion that variable life and variable universal life are down the most, some 72% and 55%, respectively, for the six months.
Other product lines, while not so depressingly bad were still off year to date.
The rest of LIMRA’s release headline read: “…But Results Improve Slightly from First Quarter.” The evidence for this is that the falloff in the second quarter was less than in the first.
What the figures show me, however, is that there is still too much pain and suffering out there for one to conclude that the recession will be over soon.
It’s not only consumers who are suffering (and thereby holding off purchasing life insurance), but obviously companies are feeling the pain and agents are getting their share too. This pain has enormous ripples throughout our economy as vendors, media and other service providers feel the pinch.
I’d love to believe the glimmers of evidence economists see are more than fool’s gold, but those sparkles just don’t look real.