2017 Reduction in Life Insurance Rates?

A major change in life insurance rules/stipulations could be the motivation for those who have hesitated to purchase a life insurance policy in the past.  Ascertaining how much money insurance companies have to keep in reserve is the leading factor.  A “reserve” is a amount or percent of liquid assets that insurers must have on hand to satisfy all claims from active insurance policies and outstanding liabilities.  Life insurance rates are expected to decrease in 47 of the 50 states and, at least 2 life insurance companies have already reduced their policy rates.  With this, other insurers are expected to follow suit.

USAA Life Insurance Co. and Lincoln Financial Group are two of the first companies to implement rate reduction.  Overall, the rate reduction ranges between 1 and 15 percent and will impact new 2017 policies.  According to USAA, clients who obtained a life insurance policy prior to 2017, will see a greater reduction in their premiums as they paid higher rates to begin with.  The insurance industry hopes that the rate reductions from the life insurance rules will draw a new wave of customers.

Most consumers believe life insurance to be costly than they actually are.  In a 2016 survey done by Life Happens and LIMRA (insurance industry groups), they found that consumers believed that life insurance costs to be at least 50% more than the actual rates.  For example, the survey asked the public what they thought the premium would be for a healthy, 30-year old person obtaining a 20-year, $250,000 term life policy.  Many people answered $400 when it was actually closer to $200, half of the estimated amount.

The new life insurance rule may give the sector the opportunity to show people what the policies truly cost and that they are often very affordable.  Remember, most people obtain life insurance policies when they think they’ll need it (sometimes too late) rather than have it all along.  It is tough to say when the right time is to obtain a policy as life is unpredictable.  But, if you can afford a policy, get one.  If you’re interested in a life policy, please feel free to contact us for a free, no obligation quote.  Here’s to health and happiness!!