Since the end of 2008 I have been following with detail as rapidly as possible about the changes in the life insurance business. The downward trend in term insurance rates and the higher reserve requirements for universal life NLG policies are changing the landscape daily,
Yesterday John Hancock, not exactly a huge term insurance player anyway, announced that they will be raising their term rates. That they are doing it is no big surprise, but what is starting to stand out is the speed with which companies are instituting and locking in rate increases. It used to be a few month long process to phase in new rates. Companies would allow 4-6 weeks for people to capture the old rates. Changes happening now are barely giving time for insurance agents to get the word out before the opportunity is gone.
Another interesting thing is that the changes, none of which are really good for consumers, are taking different forms. Prudential a few weeks back announced a 5% increase in their no lapse UL products. This didn’t affect term insurance rates, but did impact what a term could be converted to. Protective Life announced a very tiny increase in 10-20 year term rates, a little bigger increase on 30 year rates. And then, kind of interesting, they didn’t change the rates on their no lapse UL, one of the best on the market, but they removed it from the products that you could convert their term to.
Then came today’s John Hancock announcement. A sizable increase in their term insurance rates but they kept their conversion options the same.
Bottom line. What we are seeing, no matter how it looks from each different company, is the end to the downward trend in life insurance rates. There was a lot of hoopla over triple X, the big rate change in the year 2000. That turned out to be nothing to talk about once it was all said and done. What is occurring right now is an event that will impact every company and every future policy owner.