Suddenly, life insurance is cheap

Suddenly, life insurance is cheap

Term-life prices have fallen 33% in 10 years. The reason: Americans are living longer, which means insurance companies pay out less often.
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Article IndexBy SmartMoney

In an otherwise forgettable conversation last year, a friend told Tammy Arana that she was missing out in an area few people talk about these days: life insurance. Arana, 35, already had two policies, but with two middle-school kids and a mortgage, it wasn't enough. When Arana said she was paying $125 a month for $350,000 of coverage, her friend told her she could do better.
After going to a financial planner her friend suggested, Arana, a Hollywood, Fla., firefighter, discovered she could spend two-thirds less and more than double her coverage. Total savings: $19,000 over 20 years. "If I drop dead tomorrow, I know my family is going to be taken care of," she says.
It's not easy thinking about our mortality. Even harder to contemplate is what life would be like for our loved ones after our premature expiration. Indeed, nearly a third of all adults in this country have no life insurance, and even among those who do have policies, two out of five think they don't have enough, according to market-research firm Limra International.
But the morbid-minded may be in for some big savings these days. Thanks to everything from increased competition to lower mortality rates, insurers have been quietly lowering prices for so-called term-life policies at an unprecedented rate. For many thirtysomethings, an annual premium as low as $500 can now lock in $1 million in coverage for the next two decades. Even folks in their 40s and 50s can still get good rates if they're in good health.
Here's the catch, though: Don't expect your typical insurance agent to go out of his way to trumpet the prices to newcomers or remind current policyholders to check for the new discounts. According to the Insurance Information Institute, the number of term-life policies sold has inched up just 4.5% in the past 10 years. Commissions are so low "it's uneconomical for agents to even make the calls for term life," explains David Woods, the president of the Life and Health Insurance Foundation for Education, an organization funded by the insurance industry.