Lock In Your Rate Before Year-End
(MONEY Magazine) – If you need life insurance, you should never procrastinate. But now there's more reason than ever to get a policy before Dec. 31. After more than a decade of declining insurance rates, prices for certain level-premium term policies are expected to rise after Jan. 1. The reason: New nationwide state insurance regulations adopted by the National Association of Insurance Commissioners require insurers to hike reserves to cover future claims.
The hardest-hit policies will be those that let you lock in a flat premium for 30 years. Donna Claire, an actuarial consultant who helped draft the new rules, predicts 50% to 100% price hikes. As a result, say Claire and other industry experts, some insurers may stop selling these policies; others may shorten the level-price guarantee period to 10 years.
Even policies that let you lock in a rate for 15 to 25 years may become more expensive. The premium on a 20-year guaranteed level-term policy could rise 5% to 40%, says Christopher Nickele, actuarial officer for Zurich Kemper Life, with the so-called super-preferred risk group (young, healthy people) likely to see the sharpest increases. Because that group now enjoys the steepest discounts, insurers have less room to absorb the higher costs stemming from the new rules. For policies with shorter terms, competition and improved mortality rates will probably hold down price increases.
If you're in the market for insurance now, get the longest premium guarantee you can afford within the term you need. For benchmark rates, call low-cost providers such as USAA Life (800-531-8000) or Ameritas Life Insurance (800-552-3553; www.ameritasdirect.com) or get bids at www.quotesmith.com.