2/3 of 2009 have slipped by and there is just no denying anymore that the industry trend for external guarantee life insurance policies such as term insurance and universal life with a no lapse guarantee has changed.
Term insurance has been going down in price and extending to longer term guarantees for the past 15 years and no lapse UL’s have been getting more and more competitive for the past 6 to 7 years. In the grand scheme of things that has changed. Most strong term insurance companies have raised their rates. Some have discontinued some of their longer terms and no lapse UL’s. Things, while not drastically changed, have been shaken up.
So, is anyone bucking the trend? We recently saw rate decreases on shorter (10 and 15 year) term policies with Midland National and North American. This seems to follow the logic of reasoning behind this new trend, that greater reserves are being required on longer guarantees. The money has to come from somewhere so the rates go up. Shorter terms haven’t seen the same kind of impact and obviously there are companies out there that see an opportunity and are going after it.
Genworth Life and Annuity and United of Omaha have held the line on their externally guaranteed no lapse universal life policy. No price increase on their product and none has been hinted at. So does that mean that we may seen the downward trend in pricing resume in the near future?
In the world according to Ed I would say no, overall prices have hit bottom and you will no longer seen the all out wars of the past 5-10 years where companies are scrambling and fighting to be the lowest cost term insurance on the market, if only for that day. We may see some decreases here and there, but kind of like what I mentioned above. Since the first of the year I’ve mentioned 15-20 company price increases and the decrease on the short terms above is the first decrease I’ve seen.
Bottom line. Term insurance and no lapse guarantee UL’s, non cash value policies, will continue to be the best thing you can have in or add to your portfolio. While we may have seen the end of an era, staying in touch with a good independent agent will ensure that you get first shot at those policies that buck the new trend.