In this industry we are constantly bombarded with statistics of all sorts. Quarterly annuity sales figures; demographics of long-term care insurance purchasers; percentages of boomers “unprepared” for retirement; and so on. It can get mind-numbing.
Nevertheless, some tend to catch your eye, even if they aren’t from a just-released study. For example, in an article linked to the MSN home page earlier this week about common life insurance mistakes, I ran across some statistics from a 2009 LIMRA report on life insurance lapse rates. The report said close to 12% of whole life policies lapse in the first year, 10% lapse in the second year and almost 7% lapse in the third year of ownership. By contrast, lapse rates for term life insurance were around 7% in years one and two and about 6% in year three.
That article contained a link to another article, titled, “What to do if you can’t afford your whole life insurance premiums.”
I found it interesting that in this article, intended to provide good advice to consumers, there is no mention at all of the secondary market. The “alternatives” for people having difficulty paying whole life premiums included:
- Reduce the face amount to paid up status if there’s cash value in the policy.
- Exchange the life insurance policy’s cash value for an annuity to eliminate premium payments.
- Switch to term life by using the whole life insurance policy’s surrender value.
- Borrow from yourself by taking out a loan against the cash in your insurance policy.
That’s it. What about looking into a life settlement? In many situations, surely the consumer would come out much better with a life settlement than by “switching to term life by using the whole life insurance policy’s surrender value.”
As we trumpet in the December issue of Life Insurance Selling, the life settlements market has experienced a resurgence in 2010, and the prospects for this market look promising as we approach 2011.
If you haven’t already, take a few moments to read about this resurgence from a couple of industry experts who are right in the middle of it:
- Life Settlements Industry Approaching Recovery by Stephen Terrell, and
- Primer on the Life Settlements Market by Kenneth Scheinholz.
And for fun, why not check out our exclusive interview with December Life Insurance Selling cover girl Betty White, who via her spokesperson agreement with The Lifeline Program, is giving the life settlements market some added visibility and credibility in the minds of consumers who stand to benefit from this important alternative.
More blog entries from Brian Anderson.