tailieunhanh - The Benefits of a Secondary Market For Life Insurance Policies

Some small businesses will receive tax credits to offset their contributions to premiums. To be eligible, a company cannot employ more than 25 workers, and, in 2010, those workers must earn less than $50,000, on average. Beginning in 2014, the earnings threshold will be indexed to the consumer price index for urban workers (CPI-U). The legislation’s penalties apply to certain employers, as well as to individual people who do not obtain coverage. In particular, a company with at least 50 full-time employees that does not offer insurance could be subject to penalties. Other penalties can be imposed if the insurance offered. | Wharton Financial Institutions Center The Benefits of a Secondary Market For Life Insurance Policies by Neil A. Doherty Hal J. Singer 02-41 The Wharton Financial Institutions Center The Wharton Financial Institutions Center provides a multi-disciplinary research approach to the problems and opportunities facing the financial services industry in its search for competitive excellence. The Center s research focuses on the issues related to managing risk at the firm level as well as ways to improve productivity and performance. The Center fosters the development of a community of faculty visiting scholars and . candidates whose research interests complement and support the mission of the Center. The Center works closely with industry executives and practitioners to ensure that its research is informed by the operating realities and competitive demands facing industry participants as they pursue competitive excellence. Copies of the working papers summarized here are available from the Center. If you would like to learn more about the Center or become a member of our research community please let us know of your interest. Franklin Allen Co-Director Richard J. erring Co-Director The Working Paper Series is made possible by a generous grant from the Alfred P. Sloan Foundation Working Paper Modified 10 14 02 The Benefits of a Secondary Market FOR Life Insurance Policies Neil A. DOIIERTY Hal J. Singer In this article we examine the benefits that accrue to policyholders and incumbent insurers from an active secondary market for life insurance policies. We begin by examining the benefits of secondary markets in other financial service industries including home mortgages catastrophic risk insurance and Nasdaq-listed securities. Next we outline the economic theory of a life insurance market both before and after the introduction of a secondary market. Without an active secondary market the equilibrium quantity of impaired policies that is surrendered is inefficiently low.