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An insurance business has value if its cost of float over time is less than the cost the company would otherwise incur to obtain funds. But the business is a lemon if its cost of float is higher than market rates for money.. Buffett also touches on what makes valuing an insurance company difficult.nsurance Valuation Insight. A couple of key metrics can be used to value insurance companies, and these metrics happen to be common to financial firms in general. These are price to book (P/B) and return on equity (ROE).
Whole life, universal life, and variable life insurance are the three primary types of cash value life insurance. When you pay your premium, a portion of that payment is allocated towards the cash value. The life insurance company invests the money into a conservative-yield form of investment.The cash value grows over time as you continue to pay your premium and through the interest you earn.The life insurance cash value is the amount of money you have built up through your premium and investment interest for the length of time you have owned the policy.he life insurance company invests the money into a conservative-yield form of investment. The cash value grows over time as you continue to pay your premium and through the interest you earn.