Why Are Term Life Insurance Rates Increasing?

I have received notification from seven highly rated life insurance companies that they are increasing their term life premiums this summer. The term life market has actually been very steady and many companies actually decreased their rates over the past 5 years. They indicated that since people were living longer due to better health care….thus paying out less claims…..that they could pass some of the savings on to the consumer.

So….why are they starting to raise them again? They say it has nothing to do with life expectancy. The major reason they are listing is that the economy and tighter credit markets are affecting their investment returns. Additionally, they say reinsurance costs are rising.

A recent Wall Street Journal article offered tips to those thinking about buying a new term policy in this environment to let them know the medical requirements life insurance underwriters are considering in their pricing.

Insurers are mainly seeking clues about your risk of dying during the policy period. How much evidence they seek is generally based on age and the amount of the policy. Medical-exam results help to decide your rating classification, which helps set your premiums.

A basic medical exam usually consists of a blood sample, a urine specimen and body measurements. An attending physician’s statement also may be required. If you are older, have a history of health problems or are applying for a large amount of insurance, say, $1 million or more, the exam may be more elaborate…

The lab tests screen for diabetes, hepatitis and HIV, as well as risk factors for heart disease and certain cancers. In addition, most insurers screen for illegal drugs, especially in the 35-to-45 age group, and evidence of nicotine use. Most insurers require people to be nicotine-free for at least 12 months to be eligible for cheaper, nonsmoker rates — and longer to qualify for better rates.

Now may be the time for you to review your term policy and check out how many "guaranteed" years of coverage you have left. It may be time to purchase a new 10,15,20 or 30 year term policy and "lock" down the coverage and guaranteed number of years.

We, at McKay Financial Network, will be happy to assist you in finding the lowest life insurance quotes before the rest of the industry raises their rates.