Now is an ideal time for consumers to buy or increase their life insurance, an Insurance Information Institute report suggests.
Rates for term life insurance are likely to drop by 1% in 2008, while there will be little change in rates for permanent life policies, predicts Steven Weisbart, vice president and chief economist for I.I.I., New York.
“We foresee a continued downward trend in life insurance premiums, which began a little more than 10 years ago,” said Weisbart.
The 1% term rates drop in 2008 would be mild when weighed against the 4% average per year seen since 2000, he notes — and especially if compared to the average 15% drop each year reported between 1994 and 1999.
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The long-term decline in premiums is fading because some factors that drove rates down a decade or so ago have now stabilized, Weisbart observes. One was the growing use of the Internet, which made it easier for consumers to compare rates of a number of life insurance carriers conveniently and quickly. Reinsurance rates, which declined sharply in the recent past, also have become steadier.
Still, term policy premiums are generally less than half of what they were in the mid-1990s, Weisbart notes. For a 40-year-old nonsmoking male, a $500,000, 20-year level term life insurance policy in 2008 would cost about $725 if he qualified as a standard risk and $350 if he meets the more stringent preferred-risk requirement, he estimates. The rate for a 40-year-old female nonsmoker would be about $600 for a standard risk and $300 for a preferred risk.
Weisbart projects that premium rates for traditional whole life, universal life and variable universal life insurance will stay about the same in 2008 as in 2007.