Paying a Premium.

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Author: Cropper, Carol MarieGutner, Toddi

INSURANCE

With life expectancies going up, life insurance rates should be coming down, right? That has been the case for a decade, as term life premiums dropped by about half. But now, the industry is tightening its guidelines, and that could spell a hike of 5% to 25% for many applicants. Some insurers are raising rates outright, says Bob Barney, president of Compulife Software, which provides rate comparisons.

Others are simply making it harder to qualify for their best rate. For example, American International Group has just lowered the weight cutoff from 221 pounds to 205 for a six-foot man, says Barney. A 40-year-old in the preferred-plus rate category would pay $395 a year for a $500,000, 20-year term policy, but $490 at AIG's preferred level. Insurers are also getting pickier about cholesterol levels, family history of disease -- even driving records, says Byron Udell, CEO of AccuQuote. But some good news could be in the offing. State regulators are adopting a new actuarial table that takes into account longer life spans. That could offset the rate upsurge when states adopt the new numbers next year or in 2006.

The McGraw-Hill Companies, Copyright 2004

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By Carol Marie Cropper

Edited By Toddi Gutner