Life Insurance Premiums Coming Down

Since 2000, term life insurance premiums have been declining about 4% per year according to the Insurance Information Institute.  Premiums  are now 50% lower than they were a decade ago. Obviously the biggest reason for this trend is the mortality tables now being used by actuaries since January of 2009 which show people living longer.  These new tables show that a 65-year-old male is now expected to live to 85 where under old guidelines the life expectancy was only 81.  They also show that death rates for people in the 25 to 44-year-old age groups have dropped about 10% since 1994. 

Based on these trends, policy holders because they are living longer will pay premiums for longer periods of time for the same coverage which allows insurance companies to charge less. The biggest drop in rates are for term life insurance where there is no cash value.  A non-smoking 40-year-old male at todays rates can expect to pay an annual average premium of $350 for the pre-ferred rate class on up to $725 for the standard rate class for a $500,000 policy with a (10) year term.

Americans Debt to Income Ratios

National Household debt is starting to head in the right direction but in 2008 it hit $57  Trillion Dollars.  natdebt-vs-natincomeAmerican consumers are starting to realize that the best ROI is to pay off debt with their discretionary income. 

 Up until sometime during the second half of the 20th century, people bought homes with the full intention of paying off a land contract or a mortgage for that home in the shortest time possble.  They tried to pay as little interest in total dollars as possible and to own their home free and clear as soon as possible so as to free up money for everyday living expenses.  For what ever the reasons, primarily by “Baby Boomers” starting primarily in the 1980’s, American consumers started looking at ownership of a home as a liability rather than what it truely was which was an asset.  The 30-Year Amortized Mortgage created a tremendous housing boom during these years, but it also started a mentality of purchase decisions based on how much monthly payments would be.  This ”can I afford the the monthly payment”  mentality spilled over into the buying of automobiles, home furnishings, student loans and eventually to making minimum payments on credit card debt.  The whole world rode this storm of easy credit and ever increasing property values until the bubble burst in 2007 which the American Consumer along with the world markets are finding it a long hard slog to work their way out of.  A total American Consumer debt total of $57 Trillion will hopefully be a high water mark and a trend towards paying off debt will finally again be the norm.

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