| Insurance
is a vital part of life, whether it is for your car,
home or even your own life; insurance is a must. Although
most states and laws require people to have both car
and home insurance, life insurance is not required by
law anywhere, but that does not mean that it should
not still be an essential part of every person’s
financial
portfolio.
And for everyone who has been putting of buying life
insurance, or any other type of insurance for that matter,
there is some good news that should entice you to take
out any policy that you do not already have in place.
Insurance rates, for pretty much any type of insurance,
are the cheapest they have been in a very long time,
giving consumers no excuse not to take out a protective
insurance policy.
There is no better time to take out a life insurance
policy to protect your family members should something
happen to you. Giving the gift of financial
security to people you care about is something they
will think about forever.
A November 6, 2006 article by Liam Pleven of The Wall
Street Journal, “Cheaper insurance rates point
to decline in life, business risks,” discusses
how these low rates point to declining risk in many
aspects of our world, despite what may seem like evidence
to the contrary.
“The world seems awash in risk: nuclear rumblings
in North Korea, bloodshed in Iraq, bird-flu scares,
terrorism, hurricanes, corporate scandals, political
uncertainty and more. But one barometer of risk -- the
price of insurance -- indicates that many facets of
life and business are getting less risky. Insurance
is a hedge against risk, and in many areas it has gotten
cheaper lately.”
Although insurance rates for a variety of different
types of policies are going down, there are some parts
of the country that are still prone to high rates.
“In hurricane-prone areas, homeowners still face
higher insurance
rates. And health-insurance costs continue to soar
because of spiraling health-care costs.”
“But the widespread declines in insurance rates
indicate that many risks that directly touch Americans'
lives are on the decline. Car-collision claims have
decreased in frequency, thanks in part to safer cars
and safer driving. Workplace-injury claims are down,
in part because of improved technology. Americans are
living longer, meaning life insurers often face lower
odds of making big payments on the term policies they
write.”
New technologies are probably our biggest asset in reducing
risk, since many of them are contributing to helping
people live longer and healthier lives. Also, insurance
rates skyrocketed after the attacks on September 11,
2001, and they are finally starting to come back down
to normal, 5 years later.
“It isn't clear if these lower costs will persist.
Insurance costs run in cycles. When catastrophes like
Hurricane Katrina or 9/11 produce big losses, investors
anticipate big increases in insurance premiums and flood
the market with capital. That creates a glut, which
intensifies competition and eventually drives prices
back down. Another terrorist strike on U.S. soil or
a major weather-related disaster could send rates higher
again.”
“In the meantime, however, the decline in rates
has been good news for many consumers and businesses.
In 2001, a 40-year-old Californian man in good health
could buy $500,000 of life insurance coverage for 20
years at $495 a year, says Bob Barney of Compulife Software
Inc., a Nicholasville, Ky., firm whose products help
compare policy prices. These days, that man might pay
$460, a 7% drop.”
Term life insurance is the type of coverage that has
seen the biggest drop in premiums and rates over the
years.
“With a term policy, a customer buys a certain
amount of coverage by paying a set premium over a specified
number of years. If the buyer dies during that ‘term’
-- 20 years is a common period -- the beneficiaries
collect a lump sum.”
“With Americans living longer, coverage is getting
cheaper. Roger Blease, whose firm makes software that
helps compare policies, says new mortality tables incorporate
longer life expectancy. Insurers use them to help calculate
how much money to put in reserves. The longer people
live, the less insurers need to set aside, says Mr.
Blease. That frees up money to reduce prices.”
With prices falling this low, there is no excuse not
to have a life insurance policy in place should something
happen to you.
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