Most people who are still paying premiums on older life insurance policies are paying for long gone data entry workers. When I first entered the insurance business, back in the early 80’s, one of the truths that was preached by the older guys was that everyone should purchase as much life insurance as they can afford and do it as soon as possible and then plan to hang on to that policy for the life. The reasons were that you never know when you might die or get sick and become uninsurable of course, but the other reason was because life insurance rates were always going to be more expensive the older you got. This makes good sense, even now, I mean the older you get the more likely you are to die.
But a strange thing occurred in the life insurance industry over the past 30 years that no one ever considered back then. It turns out, that for most people who are in good health; life insurance rates may actually be going down as they get older. Now this seems counterintuitive but there are a couple of reasons for this. I’ll explain them for you
Life insurance rates are driven by lots of things but mostly there are two important factors. The two things that have a huge impact on life insurance rates and which have changed dramatically in the recent past are mortality tables and the expected expenses in the policy. Let’s take a quick look at each of these and how changes in them might now represent a huge opportunity for you save some money on your current life insurance policies.
Life expectancy has been increasing steadily with improving safety, medical technology and patient care and preventative medicine. As this changes, we see corresponding changes in the mortality tables that used to calculate the rates on life insurance policies. But remember, since a life insurance contract by nature is a long term contract, all the calculations have to be done at the beginning of the policy and these remain unchanged over the life of that policy. So, if 15 years ago your life expectancy was 2 years less than it is today, this means that your 15 year old life insurance policy rates are based on old data. A similar new life insurance policy, with rates based on an updated mortality table, would likely cost you less money each year for the same or better protection.
Now let’s look at how technology changes life insurance rates. Thirty years ago, when I first got into the insurance business, life insurance companies employed vast numbers of data entry clerical staff to make calculations and updates on life policies regarding their cash values, surrender values and other features that change over time. Today, those same calculations are done in seconds by computers. Close your eyes for a moment and just envision floor after floor of empty desks and cubicles in the buildings of these large life insurance companies. Yeah, those workers are gone and have been gone for nearly a decade but you are still paying for them. Remember who earlier I explained that life insurance contracts, because of their long term nature, have to include all of the expected expenses from the beginning for the life of the policy. The longer you hang on to these older policies, the more money the life insurance company makes and the more you spend over and above what you might need to spend on a newer, more modern life insurance contract. Makes no sense for you to continue to do this does it?
So what do I see from day to day from my vantage point in this business? Well, usually, people in good health who come to us and want us to update their older life insurance policies end up with several options, all of which are good. In most cases they can reduce or eliminate their life insurance premiums, or keep on paying the same premium but let their new policy build up a much larger cash value. Also, in most cases they can add a long term care rider to a new life insurance policy for free.
The take away message here for you is that if you have a life insurance policy that is 10 or more years old, you really should take 5 minutes of your time and give us a call and let us take a look at your situation. It is unusual when we are unable to provide better coverage at a lower cost. I know that messing with life insurance is boring and paperwork seems like a hassle, but the next time you worry about how much of your money is burning away with these increasing gas prices, I want you to remember this easy way to perhaps put some money back in your pocket. For more help with your life insurance needs, please call Clinard Insurance Group, toll free, at 877-687-7557. Or you can visit us on the web at www.ClinardInsurance.com. We will be more than happy to help you figure out if you are still paying the salaries of workers who were fired years ago.
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