We also became more aware of the exercise of policyholder options.
- This was not just through surrenders of annuities but also through options that we thought were safe, such as policy-loan provisions in ordinary life policies with fixed interest rates of 5% or 6%.
- I remember Sylvia Porter, the financial columnist, writing about borrowing against your life insurance at 5% or 6% fixed interest and investing in a money market account at 15% interest.
- Insurance companies experienced a cash-flow squeeze as money flowed out through the policy-loan feature.
- There were some company failures at this time; Baldwin United was one of the most prominent.
- Other companies suffered lesser degrees of financial stress.
-- DENNIS L. CARR