Jennifer Openshaw
In It's a Wonderful Life, Jimmy Stewart's George Bailey gets a cold, in-your-face reminder of what his life was really worth.
How? By seeing what happens to his family and those around him in his absence. Those scenes, and the pitiful cash-value life policies he offers to save his tail, always make me think about life insurance. I know that wasn't director Frank Capra's intent. But a few days earlier, I was surprised to learn of the declining costs of the most basic form of life insurance, so-called "term life." With term life, you pay a premium for a simple, single benefit payment in case you -- well -- mail it in. So I was inspired to check it out. After all, how often do I get to write about the decreasing cost of a financial product or service? Other than brokerage commissions, hardly ever. But these lower costs make it time to ponder what George Bailey should have done -- and what you should do, too. In fact, according to industry advocate Insurance Information Institute, term-life premiums have declined some 50% in the past 10 years and are dropping at about 5% per year. In 2007, they are expected to drop another 4%. Why the decrease? Are we getting less for our money? No -- a payout is a payout, and aside from a few exceptions such as suicide, a death is still a death. You die, and your beneficiary collects. Here's why premiums have dropped:- Longer life span People aren't dying as early or as often. Health care advances, better personal care and even all those seat belts and air bags are postponing the inevitable and reducing premature deaths. For 25- to 44-year-olds, the death rate dropped from just under 178 per 100,000 in 1996 to just under 162 in 2004 -- a 10% drop in less than a decade.
- Corporate efficiency Automation advancements have made insurance companies more efficient and flexible, and have improved risk assignment and investment management. Corporate-speak translated: fewer premium dollars go to overhead.
- Competition The Web has increased transparency, driven prices down and made it easier for customers to price-shop. Term life insurance is simple enough that you can really shop and buy online. Portals such as Insweb and einsurance.com offer dozens of competitive quotes.
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