Term Life: The Safety Net Comes at a Higher Price
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THE life insurance industry is battening down its hatches — and consumers, it turns out, will pay the price. Until recently, prices for term life, the most popular kind of life insurance, had been declining for more than a decade. But new regulations requiring insurers across the country to set aside more money to cover their potential payouts have caused rates for many policies to jump 20 to 50 percent. Before the new rules started taking effect on Jan. 1, a 45-year-old Pennsylvania man in excellent health, to pick a typical example, could get $500,000 of coverage at a guaranteed annual premium of $690 for 20 years from Transamerica Occidental Life Insurance, a leading seller of term life, according to AccuQuote, an online insurance agency. Now, that coverage is selling for $850, an increase of about 23 percent. The regulations, which do not affect whole life policies, are being adopted state by state. They bring prices elsewhere in the country closer to levels in New York, where reserve requirements — and hence prices — have long been the highest in the nation. Later this year, New York is expected to ease reserve requirements, putting its insurers on an equal footing with the rest of the country. What’s a consumer to do? It is more important than ever to shop around. Rates now range more widely, and there is greater variety in the policies being offered, most intended to save a customer money in the short run but with the risk that costs will rise considerably in the long run. More : query.nytimes.com |