Life Is Tough

It's a tough market for life insurers these days. With sales down and investment losses up, many firms are more focused on preserving their cash than selling policies.

A survey by research firm Limra recently found life insurance sales plunged 23 percent in the first half of the year, the biggest decline since 1942.

But that drop is partly by design, the Wall Street Journal reports. The recession certainly hurt sales, but insurance companies aren't aggressively selling policies either. In fact, insurers are taking a harder approach to underwriting risks such as obesity and high blood pressure to collect more fees, the Journal says. The reason: a fear of being undercapitalized after large real estate losses.

Big insurers like MetLife and Sun Life Financial are worried about their capital positions after losing money on investments, according to the paper.

Insurers are heavily invested in real estate: 19 percent of their holdings are in mortgage-backed securities, and another 10 percent are directly invested in commercial mortgages for things like condos, shopping malls, and hotels, the Journal reports, citing figures from the American Council of Life insurers.