Page 15 - Life Assurance

example, it costs less to issue one policy for L.E
5,000 or L.E 10,000, than it does to issue five to ten
policies of L.E 1,000 each. Reduction in cost may
also be made because the contracts are issued only
to preferred risks, individuals who pass very rigid
underwriting standards. Savings may also stem from
a reduction of the agent's commissions on the sale
of contracts. Each of the sources of economy
appears to be a legitimate method of reducing the
cost of distributing life insurance.

Some insurers however, make savings in
what appear to be less legitimate ways. For
example, specials may contain reduced schedules
of cash values, fewer settlement options, less
generous settlement options, or reduction of other
services. It is not easy for the typical buyer to
evaluate the differences, with the result that
misleading comparisons may be made with regular
contracts.

Even through abuses of this kind may occur
in the offering of specials, it appears desirable
that insurers tailor their offerings to fit as closely
as possible the varying needs of the public,
particularly when reductions in distribution
costs become possible.

5/2/4 Modified Life Insurance Contracts:

Modified Life insurance contracts are those
in which the premiums are arranged so that they
are smaller than average for the first 5 or 10

115 Life51/life/life 08