The whole point of life insurance is to “insure” against end-of-life calamity. Some market trends and legislative activities are bringing the whole matter of affordable life insurance to the minds of people young and old.
Term life insurance is the most affordable life insurance product, month to month, and because of some demographic and lifestyle changes across the population, premiums for term insurance are right now near the lowest point they have been in 20 years. Young consumers without life insurance policies are looking with increased interest at term policies.
AFFORDABLE LIFE INSURANCE QUOTES
The insurance product is called “term” insurance because premiums are locked in for a fixed duration, or term, at the end of which coverage continues but premiums begin to rise. Customers buy term because, first of all, it is affordable life insurance. But they also are betting that either they will die during the stipulated term and the insurer will pay their heirs, or that they when the level premiums end, they will have sufficient income to continue to pay rising premiums.
Some term life insurance policyholders eventually convert their coverage to a permanent insurance product. The benefit of doing so is that the insured does not have to face ever-increasing premiums as he ages. The penalty for doing so is that the new fixed premium is larger than was the payment for the term policy. This is when a policyholder must pull up his calculator app and crunch the numbers.
Because the U.S. population continues to age, however, another kind of conversion also is becoming popular: turning life insurance into long-term care insurance. According to a Genworth Financial study, long-term care costs are rising faster than the inflation rate in all the major metropolitan areas of Florida. Genworth concluded that the average annual rate of a private room in a nursing home in Florida is now $82,000.
TERM LIFE INSURANCE POLICIES
This month, Florida legislators established a task force and a calendar for examining just what cost savings there are for Florida seniors who convert their life insurance to long-term care plans to become Medicaid eligible. The task force will study the issue this year and report back with recommended legislation for the 2013 session.
The most affordable life insurance—term insurance—serves younger consumers well, lends itself to conversion to permanent insurance at a later stage, and in turn can morph into a long-term care benefit for people near the end of their lives. At every successive stage, avoiding calamity remains the goal.