Has anyone seen any figures as to the average lifespan of an FE policy. One company says that the average lifespan of their cancer polices is 14 years. I would think FE would be less as the average issue age would be higher. Also, you are dealing with a different income group on the whole.
Average Lifespan of FE policy???
- Thread starter rousemark
- Start date
I’d say taking into account death and lapses 8 yrs . I have noticed once the policy gets to yr 4 a r so it mostly stays till death . But I’m suprised how many claims I’ve had after yr 4 . I still can’t see how fe CO’s make money after you to pay 200% 2 yr comp and so many claims from yr on . I did notice a few Aetna’s I wrote on 80 yr olds. They just lapsed the policy at yr 7 as they almost put as much in it as getting out .I just had a Trans claim 7 days short of 2 yrs .
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To answer your question... less than the guy that bought it. 
Ever asked yourself how much money a company makes off lapsed policies. Perhaps an incorrect way to look at it is to assume the money is made when the policy stays on the books for a long time. Seems to me if you could run policies out 4 to 5 years then have them lapse and not be responsible for the face, you could make pretty good money if you had volume.
Ever asked yourself how much money a company makes off lapsed policies. Perhaps an incorrect way to look at it is to assume the money is made when the policy stays on the books for a long time. Seems to me if you could run policies out 4 to 5 years then have them lapse and not be responsible for the face, you could make pretty good money if you had volume.
Great point.
This is what helped nuke the LTC market. Carriers pricing in lapses similar to other products but then no one lapsed their policies.
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Limra has some stats related to this in a few different studies. I dont remember the exact numbers, but I do remember that SI life insurance and GI life insurance had lapse rates that were 5x higher than FU life insurance.
Of course average policy life span takes into account other factors. But Id guess the 10y range.
Of course average policy life span takes into account other factors. But Id guess the 10y range.
We all know CO’s love it when you cash in at yr 10-15 as their all off the hook for the claim . Run your claims yr 5-10 on your policy’s and compare to premium your book brings in . Obviously if all people kep their policy’s till death life ins would be 3 times the price . Lapses abd surrenders obviously a lot to allow profitability.
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I've had three deaths that I'm aware of this month. All three were in the 12 to 15 years on the books range.
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Actuaries are usually really smart people but they screwed that up. Did they not realize that people buying ltc were relatively affluent and big time PLANNERS. How the didn't see the difference with the regular term buyer and ltc is beyond me.
tikibarrister
Guru
- 472
And FE clients are neither.
