Cost Comparison

  • Until the buyer understands how the product works, attempts to compare price are essentially meaningless.

1972 - SOA - Life Insurance and the Buyer by Anna Rappaport, Society of Actuaries - 2p-Article

  • (p117-120) - Exhibit Il  which shows that, in the last fifty years, no less than 21 different attempts have been made to solve this problem. 
  • Furthermore, enacting a federal statute on life insurance cost disclosure would only address itself to part of the problem.

--  Statement of Stanley C. DuRose, Jr. -  NAIC / Wisconsin Commissioner of Insurance - Wisconsin / NAIC - (p107-131)

1973-2, NAIC Proceedings

  • 1976 - SOA - Cost Comparisons and Policy Language, Society of Actuaries - 16p
  • 1980 - SOA - An Extension of the NAIC System for Life Insurance Cost Comparisons, by Charles Trowbridge, Society of Actuaries - 42p
  • traditional method of policy cost comparison
  • In addition, a special LIAA-ALC-ILI Committee on Life Insurance Costs was formed to study life insurance cost comparison methods.

--  Robert G. Braund

1969 - SOA - Life Net Cost Comparisons, Society of Actuaries - 34p

  • The most obvious, though not necessarily accurate, basis of comparison of policies of the same initial or minimum face value is the premium.  (p41)

1976 0909 - Letter - ACLI to NAIC - RE: Proposed Changes to the NAIC Model Variable Life Insurance Regulation, 1976-1 - NAIC Proceedings - p623-

  • For cost comparison purposes, the natural unit price for insurance is dollars of Premium per thousand dollars of death benefit per year—adjusted as appropriate and cash surrender values.  (p131)

--  1980 0130 - Letter - ACLI to GOV (Senator Howard Cannon (D-NV), Chairman - American Council of Life Insurance, on The FTC Staff's Responses to Criticisms of the Report on Life Insurance Cost Disclosure - (p130-136)

1979 0710 and 1017 - GOV (Senate) - FTC Study of Life Insurance Cost Disclosure, Howard Cannon (D-NV)   ---  [BonkNote]  ---  [PDF-592p] 

  • Why can’t I compare cash value products and have some sense of what is going on in the marketplace?
    • Because the notion—I mean, it really is a problem, and it is a problem that is underaddressed because everyone is so focused on solvency that they forget all these other important regulatory issues.

--  Daniel Schwarcz, Associate Professor, University of Minnesota Law School 

2011 0914 - GOV (Senate-Banking/SII) - Emerging Issues in Insurance Regulation, Jack Reed (D-RI)  ---  [BonkNote]

  • In that regard, I will share with you the results of a recently published study of the ACLI and LIMRA, a study that commenced in 1979.
    • It was called "The Consumer Experience in the Marketplace Study", and it surveyed the opinions of insurance buyers and nonbuyers with particular emphasis on cost disclosure.
  • Now where does this 40% go for the comparison information?
    • Four in ten asked the selling agent, another four in ten asked another agent, and the balance asked friends and relatives.
  • What methods were used to compare costs?
    • Almost six in ten compared premiums, four in ten compared death benefits after ten or twenty years, and about three in ten examined what they would have paid for the policies If they were to drop them or cash them out in about ten or twenty years.
  • <WishList - "The Consumer Experience in the Marketplace Study">

--  Harold G. Ingraham

1981 - SOA - The Life Insurance Business--The View of Consumerists, Daniel F. Case - Moderator, Society of Actuaries (rsa81v7n38) - 18p

  • Obviously the criterion for setting up the maximum and minimum parameters can, be generalized, only if one can successfully figure out what the "true cost" of a life insurance policy is or should be.
  • If there is one clear conclusion that can be drawn from the recent discussions within the NAIC, the industry and the insurance press about the subject of life insurance cost comparison, it is that nobody has yet been able to figure out a way to place a "true" value of a life insurance policy to a given individual.
  • Some such objective standard for calculation of the cost will have to be decided upon before trying to generalize the maximum and minimum parameters for the life insurance premiums.

1973-4, NAIC Proc.