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NALC
PO Box 50053
Sarasota,
Florida 34232
Telephone:
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Fax: 941-379-6112
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March 26, 1999
Ms. Elsie Crowell
Consumer Advocate
Florida Department of Insurance
Larson Building
Tallahassee, FL 32399
RE: MARCH 29, 1999, PUBLIC HEARING CONCERNING INDUSTRIAL LIFE AND SMALL FACE
AMOUNT POLICIES
Dear Ms. Crowell:
The National Alliance of Life Companies (NALC) is a National Trade
Association of more than 200 Life and Health Insurance companies, which do
business throughout the United States. A number of our companies are domiciled
or do business in the State of Florida. Therefore, the NALC has a substantial
interest in the subject of this hearing.
By way of background, the NALC is composed primarily of small and medium size
life insurance companies. Many of our companies write small face amount life
insurance policies. The NALC Small Policy/Specialty Markets Committee is
comprised of niche marketing insurance companies. It is with this background
that we submit this testimony for your consideration.
The insurance companies which write these smaller face life policies are
often involved in the senior market. Part of that market includes the preneed
and final expense insurers. The preneed market is composed of insurance
companies that write policies directly tied to a funeral insurance contract.
Final expense insurers write a face amount which may exceed the cost of a
funeral.
Most of these policies are written in face amounts from $1,000 to $15,000.
The smaller policies are added to existing coverages. These types of policies
have been utilized by families for many years usually to provide a decent burial
for their loved ones. In fact, my wife’s family utilized such policies in
order to provide a burial for my wife’s grandmother. Her grandmother had
purchased a number of these policies over the years, knowing that she did not
have the income to set aside sufficient funds for her burial and related
expenses. She often stated that she did not want to become a "burden"
on her family at her passing. As a result of these policies, which totaled
$5,000 in face amount, she was able to provide the ability for her family to
give her a proper burial. Just knowing that she had this protection gave her and
the family a great deal of comfort.
Policies such as these are usually purchased specifically to fund burial,
medical, legal and other final expenses. Often, the consumers who purchase these
policies, do not have vast sums of money to pay these final bills. Further,
there are many consumers who never purchased life insurance when they were
younger, thinking that it was not necessary. It is only at the end of their
lives that they realize that they need the coverage. The needs of these
consumers are legitimate and real. We strongly believe that this market must be
kept viable for those consumers for which these policies are the only option.
In the time that I have been working with insurers that underwrite small face
amount life insurance policies, I have come to realize that these products are
of a great value to the consumers who purchase them and fill a vital niche in
America today. These smaller policies provide the security for people such as my
wife’s grandmother, who know that their final expenses will be taken care of
and they will not have to worry about a proper burial.
We urge you to consider these facts in your deliberations, and resist the
temptation to come to unwarranted conclusions based on anecdotal evidence. A
restriction in the marketing of small face policies, regardless of the
distribution method, would ultimately hurt these consumers who would otherwise
not be able to have this type of protection for them and their families.
We appreciate the opportunity to submit these written remarks and ask that
they be included in the written record of any deliberations. Should you have any
questions, please feel free to contact us at 847/699-7008.
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