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Message
re: Whole Life Insurance Lapse Rate
Posted on 1/26/14 at 9:50 pm to Stingray
Posted on 1/26/14 at 9:50 pm to Stingray
quote:
Does the lapse ratio have bearing on the population of people who buy WL?
No, the population who buys WL has a bearing on the lapse ratio. The lapse ratio does not alter the chance of future people's ability to keep their policy to maturity.
But, if it will make you feel better, foregoing your long term gains that are involved in a WL policy, would as I've already said, be a terrible financial decision. It would be about as bad of a decision as buying term and not investing the difference every year.
This post was edited on 1/26/14 at 9:54 pm
2
Posted on 1/26/14 at 9:54 pm to GoCrazyAuburn
quote:
No, the population who buys WL has a bearing on the lapse ratio. The lapse ratio does not alter the chance of future people's ability to keep their policy to maturity.
I understand this. A causes B, not the other way around. But the historical lapse ratio would be a good predictor of how many people would lapse in the future, if you sell the same policy, correct?
Posted on 1/26/14 at 9:58 pm to GoCrazyAuburn
quote:
But, if it will make you feel better, foregoing your long term gains that are involved in a WL policy, would as I've already said, be a terrible financial decision
If you believe the above to be true, and you believe about 80% of people who buy WL forego the long term gain (as you posted previously), then therefore, you believe that about 80% of people who buy WL have made a terrible financial decision.
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