As we approach the end of Life Insurance Awareness Month, it’s important to remember what will never end: life insurer commitments and guarantees.
This industry offers products containing guarantees that can last a lifetime – no matter how long that lifetime lasts. A life insurance policy bought today, for example, could be payable later this year. Then again, it might not be payable until the 22nd century.
In either situation, life insurers will be ready to meet their commitment.
Consumers pay for life insurance and other insurance products to protect themselves and their families against a possible future loss, whenever that loss may be. Life insurance premium payments are often designed to stay the same for a consumer throughout the life of a policy, while benefit payments can increase over time.
Some of the early premium payments can be used by life insurers to help fund later benefit payments. Reserves – the pre-funded amount – ensure that insurance companies can uphold their promises to policyholders and pay out all guaranteed benefits.
Life insurance companies must keep enough assets in reserve so they are able to pay their policyholders whenever the obligations come due. Life insurers are strictly regulated by the states to ensure this level of certainty for Americans.
The COVID-19 pandemic has brought so much uncertainty into our lives. But one thing is for certain: U.S. life insurers are still supporting policyholders and their families like they have been for more than 175 years. Through the Spanish Flu epidemic, both World Wars, the terrorist attack on 9-11, and the 2008 financial crisis, life insurers have been meeting their commitments and keeping their promises.
The calendar will continue to change. The guarantees made and kept by life insurers will not.
Paul Graham was Senior Vice President, Policy Development at the American Council of Life Insurers (ACLI). Graham was responsible for many legislative and regulatory issues, including all matters accounting and actuarial related. He also was responsible for policy issues relating to annuities, disability insurance, and long-term care insurance.
