Positive Changes in Term Life Insurance
By Laurence F. Ziff

Life insurance rates have continued to drop dramatically over the past few months. Term insurance, in particular, is the lowest priced temporary form of insurance on the market today. The premiums on term insurance are initially far lower than permanent forms of life insurance, such as whole life, and the guarantees and benefits provide a good solution to many people’s insurance needs.

One reason for the lower cost is that people are living longer and have healthier lifestyles. In 1999, a 45 year old male could have paid $1,175 annually for a $1,000,000 ten-year coverage. Today, that same male, now 48 years old, if still in good health, could get the same coverage for $775 annually. This includes a new guaranteed premium period of 10 years!

Competition and consumer demand have also played a role in driving the price of insurance coverage down. With so much information accessible via the Internet, consumers can shop for the lowest possible rate without leaving their home or office. Therefore, companies must be highly aggressive in their pricing and innovative in their policy design to be competitive.

Most insurance companies that offer term coverage now offer multi-year premium rate guaranteed periods of 5, 10, 15, 20 and even 30 years. Many consumers are able to take advantage of these long-term guarantees to fill the need for life insurance in their overall financial plan.

Price guarantees are just one of the innovations present with today’s policies. There are now policies that allow individuals to access death benefits if they are diagnosed with a terminal illness. Many insurance companies also allow their policyholders to convert their term coverage to permanent coverage, if the need arises, without proving they are still in good health, or even insurable. Some companies will actually offer a credit for a portion of the term premiums paid, which can offset the initial cost of permanent insurance.

There is at least one company that will track the "basis" or total cost of the prior term coverage when a client converts his or her term policy to a permanent cash value contract, allowing the policy owner to withdraw future "cash values" in a more tax advantageous way. In addition, there are an increasing number of companies that offer "cash back" term insurance. If the policy is lapsed prior to the end of the premium guarantee period, a percentage of the total paid premiums is refunded; if the policy is held for the entire premium guarantee period, the total amount of the premiums paid is refunded.

In summary, there has never been a better time to review one’s term insurance portfolio or policy. Even if coverage was purchased within the last 12-24 months, and certainly if purchased 3 or more years ago, better pricing, benefits and overall value may now be available.

Your insurance agent can help you decide the proper amount of coverage, give you conversion options, go over riders that can be added for benefits, such as waiver of premiums in the event of disability, and help you select the appropriate pricing.

Cohn Wealth Management represents a majority of the top-rated life insurance companies and can offer an independent, objective analysis of your needs. For further information, contact Larry Ziff, Managing Director of Insurance, at (973) 618-6276 or lziff@cohnwm.com.