As the number of companies grows announcing term insurance rate increases, in the last few weeks another snowball has started rolling down hill that will affect many, especially young adults in their 30’s and 40’s.
The most recent trend is companies discontinuing their 30 year term policies altogether citing the current cost of reserve requirements. You might remember from previous posts since the pot started boiling earlier this year that several companies have either raised rates or done away with their no lapse guarantee universal life products for the same reason.
One can always hope they are looking at the whole iceberg and not just the tip, but I would steer your ship on the cautious side of that ice cube and if you need a 30 year term, buy it now. When within two weeks Equitable, Mass Mutual, John Hancock, North American and Midland National all announce they will be discontinuing their 30 year term, I’m thinking we’re just reading the first chapter of that book.
Those last two companies should raise the eyes of private pilots as they are two of the best companies out there for aviation underwriting.
Do I think the 30 year term life insurance is doomed? Not really. I think there will be companies that will keep it and just adjust the rates to offset reserve demands, but the good deals should be considered a rapidly disintegrating piece of history. A lot of companies have already had term rate increases and their 30 year terms are still intact and fairly priced, but will it last. I’m thinking it’s fire sale time and if you snooze, you lose.
I think it is also important to keep in perspective that the term insurance industry really doesn’t appear to be sling shotting back to the rates and products of 15 years ago. Like the rest of the financial world there is adjustment going on and when the dust settles term insurance will still be a great value, just not as great as it is right now.
Bottom line. The good news is the sky hasn’t fallen and there are still plenty of deals out there. I never advocate buying insurance you don’t need, but if you have insurance that you have been considering replacing with a better value, have a term insurance need that you haven’t taken care of yet, or have a permanent universal life or whole life policy that you’re paying too much for, consider some of the great products that are still available. This is one of those rare opportunities where you can have your cake and eat it too.