Coming to Terms...

While health insurance costs continue to climb, there is good news on the life insurance front: term insurance rates continue their downward trend, which can be good news for consumers.

According to an article in Investment News “insurers are cutting the cost of term life policies as a result of heightened competition and streamlined sales processes.”

One reason for this is that, as a whole, sales of life insurance are down across the industry. One measure of this is “policy count;” that is, the total number of life policies written in a given year, irrespective of the face amounts or premiums. Compounding the problem is that average policy size is also much lower than one would expect.

Since the law of supply and demand applies no less to the life insurance business than any other, it stands to reason that insurers would like to make buying life insurance more attractive.

Of course, lower price is one way. But equally important is the purchase process itself: much like obtaining a mortgage, buying insurance can mean a daunting array of paperwork, and a seemingly endless underwriting process. To minimize both, carriers have finally come into the 20th century (that’s not a typo): electronic applications and fewer health questions help to speed things along.

Another trend is worksite marketing: used to be, the blue collar market was served by companies that sold “industrial” policies. These were low face amount, inexpensive plan paid weekly to agents who came by one’s house to “collect the debit.” Of course, those days are gone, but the folks who were well-served by that system are not completely on their own. More and more carriers sell more standardized plans that can be deducted directly from one’s wages, much like the old weekly plans.

In any case, term life insurance really is getting better (at least for now).