This is actually a little hard to get used to. After 10-15 years of term insurance rates trending downward, that isn’t the case anymore. While we haven’t seen any alarming increases in term insurance rates, one company after another is turning the corner and heading the other way.
Most recently a notice from Transamerica today that they will be increasing term insurance rates at the end of September. Unlike many of the other companies that have raised rates this year, at least Trans has provided a reasonable notice.
The same reasons for the term insurance rate increases has also impacted many external guarantee no lapse universal life policies. Some companies choosing to raise the rates (again not by frightening amounts), some removing the no lapse policies as conversion options and a few companies choosing to discontinue offering the policies.
Western Reserve a few weeks ago took a fairly unprecedented stance of discontinuing offering their no lapse UL, including all applications that were already in underwriting. I suspect they’ll get sued for the applications that were already in underwriting. It must have been too good a deal. Protective Life removed one of their products in the past very rapidly when they discovered that their was an error in their rates that was way far in the customer’s favor. I had a policy in underwriting with that product that was approved and is in force today in which the 80 year old client at most will have to pay $1.6 million in premiums if they lived to age 100 and the death benefit is $5 million.
Bottom line. As with all my posts concerning rate increases, it’s simply a prudent time to be evaluating what you have and what you might be needing in the near future. The increases might not hurt too much if you’re buying a 10 year term, but on a 20 or 30 year term, or a universal life policy where premiums are payable to age 100, that rate increase might cost you a vacation…..or two.