The green ghost hovering over the seventh annual Disability Insurance Awareness Month is low interest rates.
Nonprofit industry groups and insurers are sending me various reports indicating how common disability is and how important insuring against that risk is, when the real question is, “Do the insurance companies actually want to write this stuff right now? If they could, would they actually prefer just to take applications, put them in a big file cabinet, and wait to process them after interest rates go up?”
If the companies’ chief financial officers were being blunt, I think they’d say they’d prefer to wait to process the applications, and that disability insurance has turned out to be a product to be sold on an “opportunistic basis,” when rates rise above ankle-level.
I have, honestly, a pretty sorry bachelor’s degree in economics. I had great professors, but I slid into economics from English. One of my econ professors, Laurence Meyer, ended up serving on the Federal Reserve Board. He was very nice.
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I don’t believe that he was in a conspiracy with the Trilateral Commission to do something terrible about gold or to conceal a hidden high-speed tunnel connecting Washington, D.C., with secret hiding locations for space aliens. That’s about all I know about the Fed.
I have a vague understanding that how much influence the Fed really has over interest rates is unclear. People at the Fed itself have argued that the low rates are the result of low demand for loans from qualified borrowers, not really with Fed efforts to keep low.
Maybe that’s true. Sounds possible.
But, anyhow, two thoughts.