How Economic Trends and Diversification Affected Life Insurance Investments

Interest rates in the United States have tended to move in cycles. There have been three major movements involved in these cycles: a downward trend from 1870 to the turn of the century, an upward movement from about 1900 to 1924, and another down swing which continued into the 1940s. The rate of interest earned by the Metropolitan passed through the same three periods of rise and fall. In the first few decades of the company's history the amounts available for investment were relatively small, with the result that the earnings fluctuated rather widely from year to year.
Yet it is clear from the data available that the general tendency was toward a decreasing yield. This might be due to a large portion of the United States being unable to buy even the most affordable life insurance that Metropolitan Life Insurance Company offered. With the reversal of the trend, the net interest earnings by the company increased quite steadily from 4 percent in 1900 to nearly 5.5 percent in 1924. Thereafter, however, the return on investments has tended to drop.
During the latter half of the 1920's the fall was gradual, declining from 5.4 percent in 1924 to 5.2 percent in 1929 and 1930. During the early years of the depression there was a greatly accelerated drop, and by 1935 the net income on Metropolitan investments was slightly less than 3.7 percent. Then, the decline leveled off. In 1941, the interest earned was 3.4 percent. The interest rates for each of the major classes of investment have followed the same course as that for all types combined. Their respective net returns, however, have differed.
They also differed between different types of life insurance, from the more affordable term life insurance to the long lasting whole life insurance. Considering the two major classifications of life insurance investment, we find that mortgage loans on city and farm property have yielded a higher return than has the bond portfolio. For 10 years prior to 1929 the interest earned on mortgage loans, deducting investment expenses and asset losses, was 5.5 percent, as against 5 percent for bonds and stocks.
However, at least a portion of the higher yield on mortgage loans represents a risk element for possible future losses and reduced return on real estate acquired through foreclosure. During the period from 1929 to 1941, inclusive, the corresponding net yield on mortgage loans and foreclosed real estate combined was 3.4 percent, as against 3.5 percent for bonds and stocks. The marked increase in government bonds in the company's portfolio, coupled with the decrease in investments such as mortgage loans, contributed toward lowering recent interest earnings.
The average rate on bond purchases during 1941 and 1942, excluding short term bonds, was only 2.7 percent. This demonstrated the serious impact of economic trends and current investment conditions on the cost of life insurance to the policyholders. Even though they didn't have to ask, "What is term life insurance?" or research the best whole life policy, they still could not afford much. In addition to considerations of safety and interest yield, life insurance company investments were made in accordance with the principle of diversification.
Neither law nor careful administration could absolutely eliminate the risk of loss and, in order to minimize it, life insurance companies spread their investments as widely as possible. The old adage of "not to put all of one's eggs into one basket" is a fundamental investment policy. Metropolitan funds, invested in more than 100,000 separate items which were widely diversified in character, and spread over many communities and enterprises throughout the United States and Canada. In fact, these investments covered every state and every Canadian Province.
Wide geographic distribution minimized the effect of adverse business or agricultural conditions in particular localities. Not only were the funds spread over a great variety of categories, but within each class as wide a distribution as possible is made. With the large sums of money held by the company, and with the experienced staff available, the Metropolitan could and did carry the practice of diversification to an extent which is impossible for an individual investor. The principle of diversification is also applied to maturity dates of investments.
Life insurance companies could predict with a fair degree of accuracy the amounts they will be called upon to pay in future years, and, therefore, could select their investments to mature over a period so that when such funds are needed there will be a constant flow of maturities. Care was taken, too, to provide a proper balance between long and short term investments, so that assets would neither be frozen nor require too frequent reinvestment. A diversified portfolio with reference to maturity dates will not only bring a steady income, but in case of emergency will provide securities which can be sold in a ready market without sacrifice.

Buying Non Medical Life Insurance Online Is Easy

One of the coolest things about life insurance these days is that it can be bought online without a medical exam. Within the life insurance industry, this particular type of life insurance is sometimes referred to as "simplified" or "guaranteed" life insurance.

One of the great things about no exam life insurance is that the application process is fast, easy and simple. Another dandy part is that the no exam life insurance policy is usually issued within a few days or immediately.

Life insurance is something that almost all people know they really should have--but don't. Simply stated--people never like thinking about the possibility of their own death. However, many people can bypass this unwanted thought because of their love for their family and the desire to make sure they are financially secure in the event of some tragic event. What most cannot bypass however is the medical exam that is typically required by the insurance company prior to issuing whole or term life insurance?

Even though the popularity of No Medical Exam Life Insurance has increased, only a handful of life insurance companies off this type of life insurance policy. When you search for life insurance online, it is possible to obtain a no medical exam life insurance policy. This applies most often to term life insurance policies, so the easiest way to find no medical exam life insurance is by searching a website with a large database of insurance companies that provide no medical exam term life insurance policies.

Before you commence your shopping you should be alert that not all no medical exam life insurance policies actually apply to all people. Once you find a website to search for life insurance quotes, you'll have to complete a questionnaire of sorts. You'll be asked personal information such as your gender, age, weight, and height.

Like everything else, there are pros and cons about no exam life insurance. No exam life insurance policies are policies that don't necessitate you have a physical examination in order to qualify you for coverage. They do have a quote form that must be filled out honestly and completely, but if you are able to answer all of these questions honestly, without incriminating yourself in some manner, there's a good chance that you'll be approved for coverage. You may have seen offers on television offering life insurance coverage with no exam. There are pro's and con's to these types of policies that you need to be aware of before you buy one. Let's take a look at a couple of these.

You must balance your own want for privacy and convenience with the potential for obtaining the lowest cost life insurance. In general, the more uncomplicated it is to obtain life insurance, the more it will cost per every thousand dollars of coverage. This is not to say that a 74 year old man shouldn't apply for simplified issue policies because they will in all probability not qualify for fully underwritten life insurance anyway. However, a healthy 40 year old woman should probably just participate in the underwriting process because it will let her obtain a much larger face value of insurance for less money!

It pays to be informed about what buying, so be sure you understand what it is your buying. The younger you are the lower the no exam life insurance rates will be because you place less of a risk to the insurance provider. The amount of coverage will also affect the premiums. Once you take out a no exam life insurance policy at a particular age and for a specific coverage amount, this is the monthly cost you pay for the term no matter how long it may be.

You don't absolutely need to have a medical condition take a view at the no exam life insurance rates and purchase a life insurance policy. For many this process is very convenient because it takes time to make a doctor's appointment for the examination and it is also costly. When you apply for a no medical exam life insurance policy online you can have everything you need in position within a very short time. Pay for the no exam life insurance policy with your credit card and receive the policy by email.

If you're interested in purchasing no exam life insurance, the first step is getting a no exam life insurance rate quote online. The elements that influence the cost of the no medical exam life insurance quote you receive are your age, your gender, your weight and height and whether or not you use tobacco products. This also applies to having used tobacco products within the last 12 months. There will be enough space on the website page for you to enter the answers to these questions. The older you are, the more expensive the no exam life insurance policy will be.

Without a medical exam, you are an increased risk to the life insurance company and it utilize the answers you render to these questions to find the no medical exam life insurance quote it will give you. You don't have to assume any quote that you receive because none of them are binding. They are just services that insurance carriers provide in order to draw you in as potential customers.