Business: Insurance Rate Cut

In most industries, prices can usually be cut when costs decline. Not so in the life-insurance business. In the past half century, average life expectancy at birth has increased by 18½ years (to 67.6). Since that gives people more time to pay their insurance premiums, hence cuts the risk-of loss, rates should have been dropping. But even though a new mortality table of longer life expectancy was drawn up three years ago, insurance companies did not cut rates. Reason: life-insurance companies make their money from income on their investments, and the rate of...

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