Ask the Advisors: The cost of life insurance

Dear Advisors:

I've heard that the cost of life insurance has come down significantly in recent years. Is that true?

Yes, as a matter of fact, life lnsurance has never been less expensive than it is today! This is encouraging, especially when considering that other types of insurance – most notably health insurance – have experienced a steep rise in rates. The decrease in life insurance rates is primarily due to the fact that our life expectancies are longer than ever. Because people are living longer now, the mortality risk to the insurance company is less, so they can afford to lower the rates.

Actually, as of Jan. 1, 2009, all life insurance companies are required to use the new 2001 Commissioner's Standard Ordinary (CSO) mortality tables in all new policies written. This is a major undertaking in the insurance world that only happens approximately every 20-25 years. The last time the CSO tables were updated was 1980, and prior to that it was 1958! This is a definite advantage to the insured party as the newer standards will be directly reflected in the premiums, in many cases translating to a lower cost.

Carriers have also lowered their profit margins, reduced commissions, and generally become more competitive with each other. This makes for a very favorable environment for consumers looking to either improve on an older policy that they may own, or to purchase new coverage.

If you have an existing policy, now is an ideal time to have it reviewed. There are several significant improvements that can result from a review of an existing policy. These include: increasing the amount of coverage while keeping the same premium; lengthening the timeframe that the policy stays in force; shortening the number of years that premiums need to be paid; reducing the premium while keeping the coverage the same and sometimes a combination of the above.

It is absolutely worth the small amount of time that it takes to review a policy, especially when you see the excellent benefits that often result from doing so, not the least of which is the peace of mind of knowing that plans for your loved ones, your business, or your estate are well in order.

Joe Faler, CLU, ChFC, is a Senior Financial Consultant with Rehmann Financial and is located in the Grand Rapids office. Contact him at 616.975.2826 or by e-mailing

Erickson Braund, CRPC, is a Financial Advisor for Rehmann Financial and is located in the Traverse City office. Contact him at 231.946.3230 or by e-mailing

Advisory services offered through Rehmann Financial, a Registered Investment Advisor Securities offered through Triad Advisors, Member FINRA/SIPC.