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Term Life Insurance Rates Rise

After more than a decade of decline, term life insurance rates have changed course, increasing in 2012. Previously, we wrote about term life insurance and how it differs from various forms of permanent life insurance, such as universal life or a variable life annuity. In our continuing series on life insurance, we are exploring the trends and trade off’s between historically, ever –decreasing term life rates and recent changes causing this reversal.

To begin, rates have been decreasing since the mid-1990’s largely due to one reason – the internet. Authors Steven Levitt and Stephen J. Dubner devoted a chapter in the book Freakonomics to the topic of information availability and its correlation to price. The internet made it easy, for the first time, to compare term life insurance rates from hundreds of different policies in the comfort of one’s home. This increased competition caused term life rates to drop by 70% from the mid-1990’s.

In addition to increased competition and information availability online, two other factors drove down prices, according to Bankrate.com. First, life expectancy has increased, thanks to improvements in medical treatment. Secondly, the stock market saw tremendous increases from 1990 through 2000, allowing insurance companies to reinvest premium dollars has higher rates of return. These greater returns have been eroded with the stock market crash and subsequent recessionary period over the past four years.

The above factors have seemed to run their course and 2012 shows to be a tipping point for term life insurance rates, with several companies initiating 5% to 10% increases this year. While term life rates will likely start trending along with financial market performance, prevailing interest rates, and inflation, there are some key underlying trends that are much more drastic than overall average rate trends.

The primary drivers of term life insurance rates are an individual’s age and physical condition. Compare, for example, a 37 year old, non-nicotine user in Virginia to a person just 3 years older at 40. For the same 10 year policy, our top 10 least cost policies at PeopleSurance range from $175 to $200 per year. For the 40 year old, our top 10 least cost policies range from $195 to $240. Using a percentage change for each of these two, otherwise identical individuals, the increase over three years is between 11% and 20%. If each of these individuals is seeking a 20 year policy, the differences increase to 27%.

While term life rates are projected to increase along with the rate of inflation between 4% and 6% over the long term, a person’s age will have a much more pronounced effect, causing increases of between 3% and 9% with each passing year. In addition to age – based premium adjustments, significant unforeseen changes in a person’s health could cause even greater increases. If you are currently in a preferred plus health status (which we will be discussing next week) and you discover you have high blood pressure in the next year, you could be paying a drastically increased premium rate by delaying.

For a free, no obligation quote from our universe of term Life insurance rates, click on PeopleSurance and begin your study on rates in your area. You can quickly compare the difference between hundreds of policies and dozens of providers. Our life insurance calculator can help you determine exactly how much term life insurance you should be shopping for based on your current financial situation. If you still have questions, call, email us, or live chat with one of our agents today. We can help make your complicated decisions easy.

To know more about Life insurance agent and to gain some insightful knowledge on Term life insurance quote then do visit our website : peoplesurance.com

This article has been taken from http://www.ideamarketers.com/?articleid=3587493&CFID=243079960&CFTOKEN=30939161

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