Definition of "Disintermediation"

Joseph  Valente real estate agent
Joseph Valente, Real Estate Agent Weichert Realtors Briotti Group

Flow of funds out of one financial instrument, whose interest rates are low, into another financial instrument, whose interest rates are higher. In the early 1980s, insurance companies experienced disintermediation as whole life policies were surrendered for their cash values and these sums were then transferred to higher interest-paying non insurance products. Because of this situation, interest sensitive policies were developed by insurance companies,

 

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