When History Changed Insurance — The Lesson of Disintermediation
In the early 1980s, the world of life insurance faced a financial storm.
Interest rates skyrocketed — and many policyholders cashed out their whole life insurance policies to chase higher returns elsewhere.
This exodus became known as disintermediation.
What Happened
When people withdrew their cash values, insurance companies had to sell investments (like bonds) at a loss to pay them out. That made it hard for insurers to stay profitable, and several companies even failed.
To compete, insurers began creating interest-sensitive life insurance — policies that could offer more flexible returns and adapt to changing markets. This was the birth of products like Universal Life and Current Assumption Whole Life.
Why It Matters for Seniors Today
Many seniors still hold older traditional or participating whole life policies. Understanding this history explains why newer policies now:
Offer flexible premiums and interest rates
Include cash value transparency
Compete more closely with other savings tools
Lesson learned:
The market moves — and insurance has evolved to move with it. If your life insurance is 20+ years old, it may be worth reviewing to ensure it’s still competitive.
—————————————------
About Pivotal Life Insurance
Pivotal Life Insurance is a family owned, independent insurance agency that focuses on income protection and family security through Life Insurance products (Term Life, Whole Life, Final Expense, Pre-Need), Mortgage Protection and Annuities. With a range of product offerings, we accommodate the varying needs of our clients through resources provided by the nation’s top rated carriers. Although we are headquartered in South Florida with a branch in Maryland, we service most of the United States as our agents are licensed throughout the country. Pivotal Life Insurance is one of the fastest-growing agencies and we pride ourselves in putting you, our customers, first.
Insurance Is Pivotal. Cherish what’s important.
For more information or if you’d like to join the Pivotal family, visit www.insuranceispivotal.com or call at 561-412-5500.
