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What is an In-Force Life Insurance Policy?


Financial reports often make reference to in-force Insurance Policies. What is an in-force policy?

In-force Insurance refers to the total dollar amount of insurance that has been issued by the company. It is usually measured as the sum of the face value of the policy plus the dividends that have been issued. This is an important figure for several reasons. The face values of an Insurance policy actually represent potential payouts. Often, when reviewing a financial report, we are told the total assets of the Company. When we hear that an Insurance Company has 1 trillion dollars in In-force Insurance Policies, we might be tempted to view that as an asset.

This is not true. The Insurance Company has assets, of course, like any other Corporations, but the In-force Insurance total is not included in them. It is also not a liability. It is a separate figure that is not involved in the basic balance sheet of the Company. The dollar amounts exist only as potential.

Still, the figure is often used when discussing the size of an Insurance Company. It could be viewed in this respect as more of a sales figure than anything else. An Insurance Company is in business to sell policies so the In-force figure would represent success in their sales efforts. An online information source lists MetLife, a major Insurance Company, as having over 2 trillion dollars in In-force Insurance.

While this figure obviously marks MetLife as a major Insurance provider that figure does not have a lot of meaning when standing alone. It indicates a lot of sales success, but does not necessarily indicate financial stability or investment expertise. When you are going to attempt to rate an Insurance Company, those two areas would be a bit more telling in your analysis.

While the In-force Insurance Policy figure is often impressive, it does not have a lot of impact on the ratings of Companies given by the major rating companies. Remember that Insurance is one of the most competitive of all financial services. Competition always tends to benefit the consumer and this is certainly the case in Life Insurance. This benefit can only be realized by an informed client, however. Your Insurance Agent will be able to give you a lot of figures and offer a lot of different packages to meet your Insurance needs. If you are armed with a bit of knowledge such as the relative merits of the In-force Policy total, you will be better able to make the right decision.


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