Side Effects

Advisors might want to take a look at clients' term life insurance coverage. It's been easy over the last several years to seek out new coverage with higher dollar amounts, as premiums became more affordable, that may not be the case any longer. Longer-term policies may also be a wise buy, to lock in rates before they change for the worse.

According to John Ryan of Ryan Insurance Strategy Consultants in Greenwood Village, Colorado, premiums on term life insurance are rising for the first time in 30 years. He points out that as the calculations on which term life was based became ever more efficient, the rates went down steadily. Now, however, with the insurance industry so much the worse for wear in the current environment, the need to replace capital is generating the move to higher rates. Just a couple of companies have actually done so at the moment, Ryan says, but he anticipates that more will follow.

While the trend hasn't yet spread to whole life, Ryan says it's a possibility. So a look at your clients' current protection would not be amiss, especially if they've been postponing buying coverage. Waiting too long could not only cause problems for the usual reasons–developing health issues, increased cost because of age–but also make the cost that much higher because of rising rates.