Will Longer Life Expectancy Fuel Insurance Cost Savings?
September 17, 2012
(Long Island, NY) The single biggest factor in determining life insurance premiums is life expectancy. Complex calculations considering factors such as age, health conditions, marital status, and even geographic location can predict life expectancy with surprising accuracy.
However, most major financial decisions are best approached with caution. For example, most existing policies will continue at current rates, and new lower premiums will only apply to newly issued policies.
But before you rush to cancel a current policy and replace it with a cheaper one, you need to review your situation. If insurability factors such as health conditions or significant age milestones have occurred since you purchased your current policy, you may not see expected savings. Or the savings may be offset by other factors in the premium calculation.
Other important consideration includes return on investment. The insurers can offer lower rates because they expect to collect premiums for a longer period of time. Do the math and compare total anticipated costs for each option you consider. As always, the earlier in your life you purchase life insurance, the lower the premium cost will be. Consider your overall budget, especially after retirement. Premium savings on a new policy won’t matter much if you can’t afford to keep the policy in force.
Finally, the expected drop in premiums won’t occur overnight. Insurance companies are required by state law to adopt the new actuarial tables. However, in some states it may take up to five years to see the full impact.
So what’s your best course of action?
Most people find the most effective strategy to be consulting a knowledgeable insurance agent for a financial checkup. Try to realistically estimate both your financial needs and post-retirement income. There are online retirement calculators that can help you with this, but online calculators won’t have the familiarity with your unique situation that your own agent will have.
Insurance objectives change over time. For example, most young parents purchase their first life insurance policies to assure that the mortgage can be paid and the children educated if the breadwinner dies prematurely. A mature couple with a paid-off home may be better served by a policy providing a supplemental retirement income. Procrastinators may be scrambling to find an affordable policy to cover funeral expenses.
A knowledgeable insurance agent can make recommendations customized for your unique situation. An effective financial plan will help you comfortably reach your financial goals and objectives. And you can be sure that your agent will be the first to know about new opportunities to help you save on premium costs.
www.Equote.com helped contribute to this article. Since 1998, Equote.com has been providing insurance products including Term Life Insurance, no medical life insurance, instant life, whole, and universal policy quotes.
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