Permament Policies That Lapse.

[SamIam]

I know on the term policies the percentages are pretty high of the policies tat lapse somewhere in the 90%. What are the percentages for for permanent policies

 

[DHK]

That depends on what premise you are trying to prove.

Are you trying to prove that if you make each and every payment that your policy may still lapse?

Or, are you trying to make a point about human behavior and clients lapsing their policies for some reason?

 

[SamIam]

Actually neither I was just shocked how many policies laspse on the term side. I'm just curious.

 

[Newby]

Actually neither I was just shocked how many policies laspse on the term side. I'm just curious.

They don't actually lapse. They are converted to permenant pretty often. Some just run to the end of the term which is what the insured planned from day one. Others find term insurance coverage at a lower rate or want a different coverage amount and just take a whole new policy to increase AND add more years to the policy.

The lapses are just the ones who quit paying and the policy actually lapses. I'm not sure that % is any higher than whole-life lapses.

No one buys term with the intention of keeping it in force forever...unless they are pretty stupid.

 

[Fisher]

Sam, do you mean 'lapse' or do you mean 'don't result in a death benefit claim'?

Not that I know the answer to either.

 

[Newby]

People who buy 20 year term don't actually plan to die within 20 years. And they don't plan to keep the insurance past the 20th year.

So if you call those lapses when they have just completed their term, that's not a lapse.

 

[Guest]

I was amazed that when I was with Farmers, they told us the term PAYOUT was actually only 3%.....WOW

 

[SamIam]

I was talking about payout of death benefit.

 

[Fisher]

I was talking about payout of death benefit.

I thought so.

I would venture to think that permanent-type policies will pay out more actual claims than term. I've read that term is actuarially designed to not result in a payout. (Ya think?)

 

[Bobrobb]

Most people that buy term insurance wish they had bought permanent at the end of the term OR they thought they bought permanent and ask, "Whaddayamean it goes up?" I've seen it many many times.