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We’ve discussed a lot of different aspects of how the current recession and economic meltdown can impact life insurance. There’s more to talk about that will be coming soon

Certainly any non guaranteed product will see rate increases. That’s no surprise since the only reason a company offers a non guaranteed product is so they have the flexibility of raising rates if the cost of doing business increases. One of the costs that is hitting many companies is the requirement to carry higher reserves on policies due to rating downgrades. If you have a non guaranteed policy, that increase in reserves will be passed on to you.

Variable universal life, traditional universal life and whole life policies that aren’t fully guaranteed will see their cash value growth dwindle or even go backwards. Companies will ask customers to make up the shortfalls and tens if not hundreds of thousands of policies will lapse. The amounts of money that the insurance companies will ask you for are not for the faint of heart.

I have tried to stay ahead of the curve as the tips of the icebergs pop above the surface. I recently warned of the impending demise or, at the very least, rate increases for future universal life no lapse guarantee policies. These are still available and are the only gem of the permanent product rock pile, but within the past few weeks companies have started to change the product either to a higher price or doing away with it entirely. The latest thing out of the rumor tub is that by summer most, if not all, companies will have altered that product in some way. Two things that are important to note about this change. First, it will not affect those who already have one of these great policies in force. Companies still have to honor their guarantees and prices. Second, they’re still for sale at what will, within a few months, be unbelievably good rates.

The other tip that popped above the surface today was an American General notice saying that some of their fully guaranteed term products will have a rate change in March that will increase the price of those products by about 50%. Again, this will not impact the rates of those with policies already in force and so far only the tip of the iceberg is showing. I would guess that we are seeing the end of the downward trend in term insurance rates. Like universal life no lapse policies, I would venture to say that by this summer we will see the rate increases flowing like spring run off.

Bottom line. Prices and guarantees on life insurance are as low and as good as they have ever been. If you need it or believe you will need it in the future, get it now. If you have insurance in force and aren’t sure if you can get a better deal, check it out now. If you want to extend your term length, do it now. If you want to add permanent coverage or dump a non guaranteed permanent policy and replace it with no lapse protection, do it now.