Life Insurance Prices Expected to Continue Dropping Through 2008

The end of 2007 is a good time to evaluate your life insurance needs. Maybe you started a family in 2007; or got married, divorced, or retired? As your life changes, so do your life insurance needs. Evaluating your life insurance needs can help you find the coverage that is right for you. Another good reason to evaluate your life insurance needs is that life insurance rates are expected to drop in 2008.

Rate Predictions for 2008. The Insurance Information Institute (I.I.I.) estimates the annual premium for a 40-year-old male non-smoker buying a $500,000 20-year level term life

insurance policy in 2008 will be about $725 if he qualifies as a "standard" risk and $350 if he meets the more stringent requirements of a "preferred" risk. Rates for women and younger people would be lower. For example, the comparable rate for a 40-year-old female non-smoker would be about $600 for a standard risk, and $300 for a preferred risk.

Why Life Insurance Rates are Decreasing. Life insurance rates have been dropping the last couple of years as the life expectancy rate has continued to increase. The Center for Disease Control reports that the average life expectancy is up to 77.8 years. As Americans are living longer, life insurance providers are rewarding their consumers with lower rates. The I.I.I. also reports that life insurance companies are running more efficiently, lowering their expenses in their offices and field offices.

Buy Life Insurance When You're Young. Many people may feel they don't need life insurance when they are young. While your financial needs may be lower at a younger age, the rates are also substantially less expensive when you're young. Remember, the goal is to cover your primary assets so should something happen to you; your beneficiaries would be able to persevere financially. The best advice is to lock in as much protection at a young age while your health is good and the price is right.

Buy Only the Life Insurance Coverage You Need. Many agents may try to sell you more coverage than you need. The purpose of life insurance is to "indemnify" (replace financial loss), and what most people should be looking for is income replacement for their beneficiaries. Independent financial planners recommend the following rule of thumb: purchase an amount of coverage equal to 6-10 times your annual gross income. Review your policy often. Once you have a life insurance policy, you should review it at least once every three years, if not more often. Rates may be lower, and your circumstances may have changed, necessitating more or less protection. If you are replacing a policy, make sure you allow enough time to get your new policy in place so your coverages won't overlap or lapse.