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LIFE INSURANCE

Term rates rise

>> Check with your life insurance company to see if it has raised rates on term life insurance. Many companies have already hiked up rates by 5 to 15 percent. If yours hasn’t—and you want more term insurance—move fast, and you may be able to beat the increase. Companies blame the higher rates on the higher cost of maintaining adequate cash reserves in an environment of tight credit and rising interest rates.

Self-defense: If your company raised its rates in 2009, shop around to see if you can find a company that still has lower rates. Go to www.insure.com for a quick review of who’s charging what.

Is your life insurance assured?

>> Dredge your memory, and you may recall that in 1991, a big, top-rated insurance company called Executive Life failed, costing its policyholders $4.5 billion. Through state associations of insurance companies, some policyholders got their money back, but it took over two years to start receiving payments.

Today, insurance companies are asking regulators to cut their capital requirements. (You know how well that worked for banks.) Also, insurance companies own large amounts of blue-chip stocks and corporate bonds, both of which have obviously dropped in value. At one point in April, 2009, shares of life insurers were down more than 40 percent from their value at the start of the year.

Life insurance companies that own a federally chartered bank may qualify for bail-out money from the Troubled Asset Relief Program (TARP), along with banks and auto companies. But the flashing yellow light is definitely on. So add some insurance companies to the growing list of financial institutions you can’t necessarily trust.

Self-defense: Before you buy a life insurance or annuity policy, check the company’s rating at www.ambest.com.  If you’re not totally reassured, consider buying from two companies to spread your risk.

Also, visit www.nolhga.com to see if the upper limits of your state’s insurance association cover the cash value in your insurance policy.

(Explore your options carefully before you cancel a policy; there could be penalties, and you may have to pay more for coverage elsewhere.)

 

 

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