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Product problems often become apparent only after earnings get hit or cash loss ratios soar. My premise is that it does not have to be that way, that an experienced insurance executive, applying what he already knows, plus common sense, can gain a pretty good idea whether a product is going to be profitable or not. The executive who says "the actuary says the product is all right so I don't have to worry about it" doesn't understand the product design process. The actuarial work is important, but is partially based upon a set of assumptions furnished to the actuary by the marketing department. Those assumptions tend, naturally, to be on the optimistic side. Almost any product can be profitable or unprofitable. It depends on where and how it is sold. In retrospect, the assumptions which underlie every disastrous product prove to have been incredible given the known sales situation in the field. The trick is for the executive to measure those assumptions against his own knowledge and common sense up front. Occasionally a product and its selling situation may appear to fail the common sense test, but a knowledgeable executive will conclude it can work in a particular situation. For example, a guaranteed issue life product sold by funeral directors doesn't on the surface sound like a business you would want to be in. And yet there are companies that are in it and appear to be surviving. Then the question becomes "What am I hoping for?". What is it about my particular situation that I am counting on to make this profitable? When you isolate that, you know why you are in that business, and you know what to check on down the road to make sure it is really happening. And then there are those situations you know are bad, but you are desperate for activity and agents, hoping to gain some, and are planning later to shift production from a bad product to a good one. Risky, but it has been done, although it was usually by accident rather than design. The products discussed here are viewed from the standpoint of the company, not the agent or the consumer. Also, it is assumed for the most part that the reader understands the coverages, all of which are widely discussed elsewhere on the web. Finally, the purpose is not to provide a comprehensive discussion of any product, but rather to offer observations and cautions on specific points. Some products are so heavily lapse supported that it becomes the outstanding feature, and are discussed in the section on lapse support rather than on this page. Those products are so volatile that they can be extremely dangerous to the company, like long term care, or extremely profitable (or dangerous, depending upon what you do with the expected lapse yield), like return of premium riders. Both of those products are discussed on the lapse support page .

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