As we have reported early, often, loud and accurately, term insurance rates as we’ve grown to know and love them, lower each year, are turning rapidly the other way. West Coast Life insurance announced today that they will increase their term insurance rates effective 6/15/09. It’s a fire-sale
This follows another move of the same genre from West Coast a few months ago, the removal of their ultra competitive no lapse guarantee universal life from their conversion options.
The word in the back alleys is pretty consistent. Insurance companies have enjoyed a long run of very high profitability and high financial ratings that have allowed them to drive the cost of term insurance down. With the bruising recession, financial ratings have dropped and many companies have been forced to carry higher reserves due to the downgrading.
Don’t expect this to be the last of it, but take some solace in this. 10 years ago the best rate available for a male age 46 on a $500,000 20 year term policy was $770 a year. Currently the same policy would cost $615, unless you buy from Zander Insurance in which case it would cost you $665. The modest rate increases we’re seeing now will, I’m thinking, never return us to the levels that were around 15 years ago. Quote me a few years from now for better or worse, but this string of increases do spell the end of the downward trend, but I don’t believe they foretell the beginning of an upward trend. More like the bounce when something hits the bottom.
Bottom line. Time to get real people. Don’t buy something you don’t need, but if you need a new term insurance policy to add to your existing portfolio or replace one with a term too short for your needs, or a low priced universal life with a no lapse guarantee to replace an overpriced traditional UL or whole life, it’s fire sale time. Don’t drag your feet.