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Get term while the price is right

By Jay MacDonald ·
Tuesday, December 28, 2010
Posted: 10 am ET

I dawdled for several years before I "solved" my life insurance needs with a low-cost term life policy. I say "solved" because I never really felt the door slam or the curtain drop on the whole life insurance issue once I'd studied the insurance rates, compared insurance quotes and signed the contract. For me, it felt more like a short-term fix, pardon the pun, rather than a solution; an affordable choice among some not-so-affordable alternatives.

But time and experience have changed my view of term life. With level term, my premiums have been identical, appearing in my mailbox like clockwork at the end of each year. At first, I had to budget for it. Today, I spend more on holiday gifts than my term coverage.

Time has a way of patting you on the back for buying a term life insurance policy, even as you're aware that the day will come when that premium is going to blow up in your face like a cheap party favor. At which point, I suppose, it will be important to remind ourselves that we're still at the party and we met our responsibilities by covering our loved ones, just in case our taxi arrived too soon.

What prompts my preamble on term life insurance, in addition to my annual premium notice, was a recent forecast by Donna Kinnaird, president of Swiss Re Life & Health America, who predicts that the term life price wars of the aughts are drawing to a close.

In an interview in National Underwriter magazine, Kinnaird points out that competition on term life insurance rates reduced premiums by 30 percent for most of the past decade. But in 2009, they rose 5 percent to 6 percent on average. This year, they bumped up another 1 percent.

Kinnaird predicts that further term life insurance rate increases are highly likely because no insurance product can sustain itself forever without covering its costs. Recent regulatory changes to state reserve requirements will almost certainly increase those costs.

If you're on the fence, as I was, about jumping into term, here's what sealed the deal for me: every year you delay, the more you pay for it. When you combine this with the present bargain-basement term life insurance rates, chances are you won't make a better insurance move in 2011 than securing your family's future with a term life insurance policy.

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