Life Insurance To Become Cheaper In 2007

(With everything from college tuition to mortgage rates rising, the average middle-aged American needs a financial break.)

It may not be a free house but a discount in life insurance costs certainly will help.

It seems that everything is reaching their highest costs and rates ever, as housing prices and mortgage rates struggle to become affordable once again. The article, "Life Insurance Premiums Expected to Decline by 4 Percent in 2007, Says the Insurance Information Institute" posted on info.insure.com, explains how life insurance is about to become the most affordable it has ever been.

According to the Insurance Information Institute (I.I.I.), premiums for individual life insurance (both term life and permanent insurance) will drop an average of 4 percent by 2007.

"'This continues a generally downward trend in life insurance premiums, which began several decades ago,' said I.I.I. economist and life insurance spokesperson Dr. Steven Weisbart. 'The 4 percent drop projected for 2007 is in line with the average 5 percent per year drop beginning in 2000,' added Dr. Weisbart." This has resulted in premiums for 2006 being only half of what they were a decade ago.

"The I.I.I. estimates that, for example, the annual premium for a 40-year-old male nonsmoker buying a $500,000 20-year life insurance investment policy in 2007 will be $615 if he qualifies as a 'standard' risk and $340 if he meets the more stringent requirements of a "preferred" risk. Rates for women, younger people and for larger amounts of insurance would be lower."

Other rates are expected to lower in 2007 for life insurance products such as whole life, universal life and variable life.

The primary reason life insurance premiums have decreased in cost is due to lower death rates for the 25 to 44-year-old age group, which is the dominant life insurance purchasing demographic, Weisbart said.

"In 1996 the death rate per 100,000 for the 25-44 age group was 177.8; by 2004 it had dropped to 161.8 (preliminary data, National Vital Statistics Reports). That is nearly a 10 percent drop in the death rate in less than a decade for the prime insurance-buying ages."

The decrease in life insurance rates may be most beneficial for couples or adults with children. The majority of term life insurance holders have children. According to a study conducted by LIMRA International (an insurance marketing research organization) that researched demographics involved with life insurance policies in 2003, 72 percent of married couples and 66 percent of single parents purchased term life insurance policies. Every premium dollar invested with a term policy pays out several times more than a whole life policy.

As a result of the lower rates for life insurance coverage, people already insured may want to consider applying for more financial coverage.

"For example, it takes a $500,000 death benefit to pay a widow $2,500 a month for 17 years. Yet in 2004, according to LIMRA International, the average adult with life insurance age 25-34 had only $145,000, and the average adult age 35-44 had only $323,000 of insurance on his or her life."

Regardless of whether you have children, it is always best to plan ahead. Since rates are at their lowest ever, now is the best time you will ever find to purchase life insurance coverage.

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