How do some insurance companies encourage larger purchase payment deposits?

Insurance companies often seek to incentivize larger purchase payment deposits as it can lead to higher overall investment and retention of funds. By paying higher interest rates on larger deposit amounts, these companies create a financial incentive for consumers to invest more upfront.

This strategy works because consumers are typically attracted to offers that yield greater returns. Higher interest rates on larger deposits make the investment more appealing, suggesting that the more someone invests, the better the potential returns, thus encouraging them to increase their initial payment.

On the other hand, options like lengthening the surrender charge period or reducing administrative fees are less direct methods of incentivizing larger deposits and might not create as compelling a reason for clients to invest more funds upfront. Eliminating surrender charges can be beneficial but doesn't directly encourage larger payments in the way that a tiered interest rate structure does. Overall, offering higher interest rates is a straightforward and effective way to attract larger deposits.