Term-Life Insurance Changes
©Money Magic, Inc.  5/20/00
Saturday Daybreak KATV, Chn. 7
Mary Ann Campbell, CFP

The Product:
Term Life Insurance: It is pure insurance...no savings or loan elements. Term insurance provides death-benefit protection for a specified term of time, say two, five, ten or twenty years. If you're looking for coverage for a specified or short period of time, term life makes good sense. The risk with term life is that your health might deteriorate and you could be unable to get another policy once the term is up. Premiums can also increase dramatically as you get older.

Term life insurance is usually a good choice for young people who can't afford the higher expense of permanent, or whole life insurance. It is also good for people covering specific needs that will disappear in time, such as a car loan or a mortgage.

It costs much less and used to be easy to shop for. When you die, your loved ones get the money. That is, if your insurance company is still in business and has the cash reserves to pay. So, ratings for solvency are important, too.

The Change:
The Triple X regulation, effective January 1, 2000, requires term life insurance companies to maintain higher cash reserves. Insurers must set aside more money to pay future benefits on term policies that keep premiums level for more than ten years.

The bad news is, long term guaranteed level-term insurance premiums have risen 40-150% or long term policies have been eliminated. Some insurance cut their guarantees rather than increase premiums. However, if the price isn't guaranteed for the entire policy term, the agent must give you and illustration showing how high the rates can go.

The good news is, term insurance prices have fallen so much in recent years that many of the new higher premiums are still a bargain by historic standards. But with the new confusion, you need an independent insurance agent or web site to help you shop for rates.

Money Magic Solutions: (Who you gonna call or click?)

1. AccuQuote 800-442-9899
   You answer detailed questions, and an agent will get in touch with you. Over 250 different insurance companies are represented and rated for financial soundness.

2. www.insweb.com
   You receive instant quotes for many big-name insurance companies. By asking more questions in its online interview than other services, InsWeb does a better job of matching you with a policy and price you'll actually qualify for.

3. www.quotesmith.com
   Guaranteed policies are segregated from non-guaranteed ones. You'll receive pages of instant online quotes. Make sure you answer several medical questions to determine which policies you're likely to qualify for.