As you might have guessed, the life insurance industry has written many negative life settlement articles over the past several years. It’s no secret that the life companies do not like the settlement industry, but have you asked yourself why?
Everyone in the industry knows that less than 5% of all term insurance results in a death claim, but how about permanent insurance, isn’t it designed to last until death? Some life settlement articles estimate that the majority of permanent life insurance never results in a death claim either. Is it any wonder then, why life insurance companies are not happy with settlement companies, who buy and keep insurance until a claim is made.
In the competitive world of permanent life sales, the companies look for every advantage they can to lower the cost of coverage. If more than half of all policies will never result in a death claim, why not use that money to lower the cost of new policies? If you don’t have to pay off, why can’t you make it cheaper? The result is lapsed based pricing, which means the company anticipates, and prices in, fewer death claims.
Can you understand now why there might be some negative life settlement articles written by people who are in the business to avoid death claims? Settled contracts almost always result in a death claim and that is not in the life company’s best interest.
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