Right now may be the best time to lock in a low rate on term life insurance. American General Life Insurance Company and ING ReliaStar Life Insurance Company have both recently announced price increases on their term life insurance products for this summer. Prudential, West Coast Life Insurance Company, Banner Life Insurance Company and many others have already increased premiums on term life insurance policies this year.
Life insurance companies continue to struggle with higher credit and reinsurance costs due to tighter credit markets. These companies have seen their costs for maintaining capital reserves skyrocket as a result. Capital reserves requirements are set by insurance regulators and are meant to protect consumers by ensuring life insurance companies keep adequate funds on hand to meet policyholder claims and benefits.
The increased costs are now being passed along to consumers in the form of higher premiums. Although we may have seen the bottom on term life insurance premiums for the foreseeable future, premiums are still considerably less than they were just a few short years ago. This is due mostly to a steady decrease in premiums over the past several years, as the industry has become more efficient and mortality rates have improved.
We briefly touched on the topic of electronic applications and signatures in yesterday's blog and promised to discuss this area in more detail today. E-application and e-signature processes are seen as the 'wave of the future' for life insurance purchases. Many companies either have developed or are in the process of developing such technologies.
Consumers can complete their applications by telephone with a licensed representative and electronically sign the application at the same time. The application is then sent to the insurance company electronically. The result is a significant reduction in processing time as there are no paper applications to complete, sign and fax or email back.
QuickQuote currently offers e-applications complete with e-signatures from ReliaStar Life Insurance Company (ING) and Pruco Life Insurance Company (Prudential). We also offer simplified issue term life insurance (which requires no medical exam) with RBC Liberty Life Insurance Company and Household Life Insurance Company (HSBC). Both of these companies have e-signature and e-signature capability as well.
"Electronic applications complete with e-signatures are rapidly making their way to the marketplace," states Tim Bain, QuickQuote's President & CEO. "These are exciting times for consumers looking to purchase term life insurance online from a reputable life insurance company. We fully expect to announce partnerships with two more major life insurance companies offering this process by the end of this summer."
LIMRA International recently released the results of a new survey which show 52 percent of consumers shopping for life insurance, disability insurance, long-term care insurance and annuities turn to the Internet to conduct research and purchase coverage. This is a significant increase over the same 2006 survey, which showed 38 percent of consumers used the Internet to shop for life insurance.
Approximately 75 percent of respondents indicated they intend to conduct more of their financial business online in the next five years. Consumers also stated they wish to interact with a person regarding their online life insurance purchase, either by telephone, email or live chat.
Of course, QuickQuote has all of these bases covered. Our licensed representatives are available to help consumers complete their purchases of life insurance. And we now offer more choices for electronic applications and signatures than ever before. More on that tomorrow ...
Credits: LIMRA
Prudential Financial, Inc. (parent company of Pruco Life Insurance Company) announced today that the company would decline funds available through the US Treasury Department's Capital Purchase Program (CPP). The CPP is part of the US Treasury's Troubled Asset Relief Program (TARP).
Prudential had been notified last month that the company was one of the few life insurance companies declared eligible to receive funds under the program. Funds under the CPP are intended to provide financially stable companies with fresh capital in an effort to provide credit to the economy.
Last week, AM Best Rating Company affirmed Prudential's A+ (Superior) financial strength rating.
"Is this life insurance company safe? Will they be around to pay my beneficiaries when I die?" Both of these valid questions have been asked of us countless times over the years. But lately, questions like these are being asked with greater frequency than ever before. Therefore, I'd like to offer some information to help calm the nerves of anxious life insurance consumers everywhere.
For starters, life insurance companies that are rated A or better by major rating agencies such as AM Best and Standard & Poor's are generally considered safe. And here at QuickQuote, we only recommend companies that are rated A or better. That being said, rating agencies can change ratings on a life insurance company at any time, depending on the financial health of the company among other things. So that A+ rated company you purchased your policy from three years ago may be rated A- today.
Even if this has happened to you, we believe there is no real cause for concern. The primary reason is you are still insured by a company with an A rating (albeit, slightly lower than A+). The difference between an A+ rated company and an A- rated company is generally negligible. You really are starting to split hairs at this point. Generally speaking, A rated life insurance companies do not miss paying valid life insurance claims for financial reasons or otherwise.
"Recent turmoil in the US financial markets has put financial strain on some life insurance companies due to reduced market returns and increased capital requirements. Media coverage of AIG's troubles for example, have prompted many consumers to question the solvency of all life insurance companies, and rightfully so," says Tim Bain, President & CEO of QuickQuote. "However, there are measures in place to protect life insurance consumers."
For example, life insurance is regulated at the state level. State regulators put reserve requirements in place for all life insurance companies to ensure adequate funds are available to meet claims payment demands. In the unlikely event a life insurance company becomes insolvent, the state guarantee association will cover up to $300,000 of the death benefit and up to $500,000 in some states. You can view the limits of your specific state at the National Organization of Life & Health Insurance Guaranty Associations' website.
Our advice to consumers with existing policies is to discuss your concerns with a licensed life insurance professional. For those looking to purchase new coverage, look for a policy from a reputable life insurance company with a rating of A or better from AM Best or Standard & Poor's rating agencies. Finally, make sure you enlist the help of a qualified and experienced broker in your search (such as QuickQuote!).
The current economic downturn and tight credit markets are causing problems for most financial services companies, and life insurance companies are no exception. Most life insurance companies have seen profits fall dramatically due to market conditions. As a result, capital costs have increased and rating agencies have downgraded many life insurers. This acidic combination has caused regulators to increase the reserve requirements of the industry as a whole.
"This perfect storm has left life insurance companies with few options, and many are choosing to raise premiums in an effort to stem losses and meet additional requirements mandated by regulators," stated Tim Bain, President and CEO of QuickQuote Financial, an Internet-based term life insurance broker (www.quickquote.com). "None of these companies wants to become the next AIG, so they are forced to take these measures."
QuickQuote has seen premium increases from Banner Life, American General Life, Lincoln National Life, ReliaStar Life (ING), West Coast Life and Prudential in just the first four months of 2009. These rate increases have been on average of about four percent. Many life insurance companies have also increased policy fees during this same period.
While term life insurance still offers the best value in the market for pure protection, it appears rates may continue this slow increase for the foreseeable future.
"Although the trend is currently upward, we certainly don't expect to see the significant decreases of the past ten years or so erased entirely," said Bain. "However, now may be a better time than ever to lock in a low rate on a term life insurance policy because we simply do not know when rates will begin to fall once again."
Prudential Insurance Company of America recently introduced a new long term care insurance product called Prudential LTC Evolution. This new product is designed to simplify the process of choosing coverage options for consumers.
Consumers are only required to select a lifetime coverage maximum amount ranging from $100,000 to $1,000,000. All other benefit amounts are pre-set in the policy. The policy is currently offered in a limited number of states.
Prudential Insurance Company of America is a subsidiary of Prudential Financial, Inc., as is Pruco Life Insurance Company.
Reuters is reporting today American International Group (AIG) is seeking bids in an effort to sell its American Life Insurance Company (ALICO) unit. MetLife has made a preliminary offer of approximately $11.2 billion. ALICO has life insurance operations in more than 50 countries.
A deal for the sale of the life insurance unit is expected to help AIG repay part of the multi-billion loan the company received from the federal government last year.
It's important to note that American Life Insurance Company is an entirely different company from American General Life Insurance Company, a QuickQuote marketplace partner. American General Life is AIG's domestic life insurance unit and remains a very highly rated life insurance company.
Credits: Reuters
President Barack Obama signed into law the American Recovery and Reinvestment Act (The Stimulus Act) on Tuesday, February 17, 2009. The Act amounts to the largest economic stimulus package in the history of the United States.
The Act addresses very little in the way of insurance. Health insurance is addressed by the Act as it includes a provision for government subsidies for COBRA coverage. COBRA refers to a law that allows some terminated employees to remain on their former employers' health insurance plan for a period up to 18 months (up to 36 months for some dependents). Employees must pay the premiums for the coverage out of their own pockets. Anyone that has been on COBRA can tell you this is not often a desirable option, as the premiums can be quite expensive. However, if a person has pre-existing conditions or cannot otherwise qualify for individual health insurance, COBRA may be the only option, undesirable or not.
The Stimulus Act provides for subsidies of up to 65% of terminated employees' COBRA premiums for a period of nine months. The total price tag to the American taxpayer .... an estimated $25 billion.
It has been a while since we last blogged about this somewhat sensitive subject (sensitive to the life insurance industry anyway). In the meantime, the list of states that do not allow the use of foreign travel history or future plans to be used in determining the eligibility of a life insurance applicant has grown to a total of ten. The list now includes the following states:
These states do not allow life insurance companies to take adverse action based solely upon the proposed insured's past or future lawful travel. They do, however, allow life insurance companies to ask questions on their applications pertaining to such travel for the purpose of actuarial research. The lone exception is Florida, which does not allow any reference to foreign travel whatsoever on life insurance applications used in that state.