“Life Insurance Is Profitable Again, but Too Late for Many Insurers”

Life Insurance Is Profitable Again, but Too Late for Many Insurers,” by Leslie Scism, Wall Street Journal

“The past 15 years has been a lousy time to sell life insurance. Higher interest rates driven by the Federal Reserve’s inflation-fighting campaign have given the industry a new chance to profit. … One result is fewer people have life insurance. Today just over half—52%—of American adults own life insurance, down from 63% in 2011, according to industry-funded research firm Limra. … It is no small matter because life insurers earn a substantial portion of their profits by investing premiums until the money is needed to pay claims. Low rates depress interest income and reduce profit margins, among other negatives.”

LTC Comment, Stephen A. Moses, President, Center for Long-Term Care Reform:

This article is about life insurance, but it also applies to LTC insurance. Think about the damage government policy has done by trying to remove risk from people’s lives through providing public benefits. They sent this subtle message: don’t worry about saving, investing or insuring privately for retirement. Social Security, Medicare and Medicaid have your back. Besides, interest rates are so low, artificially set there by another branch of government—the Federal Reserve—that you can’t make any profit on your savings anyway. But today that whole system is blowing up. The entitlement programs are under water. People heeded the government message so too many have little saved. Interest rates and inflation are flaring which makes managing financially harder than ever. Here’s the irony. The only hope we have for better economic times is for the private sector, including private insurance, to save us from the wreck government fiscal and monetary policy have created.