And after Triple-X, non-guaranteed policies
are going to get even cheaper.

Once life companies no longer have to worry about guaranteeing prices, they will be less concerned with charging too little. After all, if they can raise your premiums later, why not price those premiums very low and be even more competitive? Therefore, the difference that now exists between $525 and $752.50 will widen even further.

Also keep in mind who gets the extra money that you would have to pay for the guaranteed product. If it turns out that the $525 premium did not have to go up, then you would have paid an extra $227.50 per year, for a total of 20 years, for a guarantee that you never needed.

Remember, the actual cost to a life company, to pay death benefits, does not change depending on the type of guarantee that you buy. Statistically, a certain number of people will die during the level term period. The fact that a policy premium is guaranteed does not impact the cost of claims to the life company.

So Who Benefits?

Who ends up with all the extra money a consumer would pay for a guaranteed Triple-X policy? The life insurance company gets that extra money. If you bought the guaranteed New York policy, and paid an extra $227.50 for 20 years, and you assume that the excess premium would have earned 5% interest, then the company ends up with an extra $7,898.63. None of that extra money would be refundable to you if it turned out that the guarantee was never needed. $7,898.63 extra profit is not a bad deal for a life company on a $752.50 premium.

If you do what I think most people will do, you will see the guarantee as being far too expensive and you will end up buying the cheaper non-guaranteed policy. Even if you do that, the company still benefits because they no longer have to give you a guarantee that they once did.

Either way you look at it, Triple-X is a pro-company, anti-consumer regulation.

How can state regulators, who are supposed to protect you, push for the implementation of such a bad law? The answer is that these regulators are operating not with your interest in mind, but with the interest of the life companies in mind.

More Proof.

If you need even more proof of this, consider that the ACLI has endorsed Triple-X. The ACLI describes itself as:

"a trade association representing 493 legal reserve life insurance companies conducting business in the United States"

The ACLI explains its mission at its web-site:

"to provide a unified association to advance the interests of the life insurance industry"

The ACLI acts for companies; not for consumers.

If Triple-X was bad for life companies, why would the ACLI be endorsing it?

What Should You As A Consumer Do?

You should be angry if your state regulator is considering passage of Triple-X without addressing the loophole in the regulation. You should also be angry if your state regulator is not actively fighting against other states adopting the regulation. Even if your state does not adopt Triple-X,the adoption of Triple-X by other states can impact the term insurance sold in your state.

The reason is that states passing Triple-X will make it extra-territorial. This means that ALL policies the company sells, not just the ones in the state passing the law, must conform to Triple-X. The only way a company could avoid this is to withdraw from that state. Simply put, if enough states pass Triple-X for January 1st, it won't matter what your state does. You will still be hurt.

Therefore, I recommend that you consider writing to your state's governor to ask why they would allow their Insurance Commissioner to participate in the passage of such an anti-consumer law. Regardless of whether your state actually passes it, as a member of the NAIC, your state has effectively endorsed this regulation through its participation in that organization. Why would your state even be a member of an organization which creates such anti-consumer laws as the NAIC is endorsing?

Most important, you need to act now to take advantage of the competitive level term policies available today. These are competitively priced policies which fully guarantee their level premium for the initial level term.

If you buy one of these policies today, the policy cannot later be amended to change its guarantee. Triple-X grandfathers all older policies sold before Triple-X implementation.

Incidentally, New Yorkers can ignore this advice because you've already been hit by your state's version of Triple-X. Your only alternative to the high priced guaranteed policies in New York, is to go to a nearby state to buy guaranteed level term, or to buy the non-guaranteed policies currently sold in your state. If you do decide to take a vacation out of New York this year, the amount that you will save, between a guaranteed New York policy, and a non-New York guaranteed policy, purchased in another state, may help you pay much of the cost of your vacation.

Get the Longest Guarantee You Need.

Before Triple-X hits you need to buy a level term policy whose level term period (and its guarantee) cover you for the balance of the time period that you will need term insurance.

Most life insurance buyers do not need lifetime "whole life" type insurance. The reason is simple: Most of us buy life insurance to address the financial loss to our dependents if we die.

What is that financial loss? For most it is the loss of a breadwinner's income. If you earn $30,000 per year, money which your family depends on to live, then that paycheck will be gone if you die. However, this problem does not last for your whole life (which is why most people do not need whole life).

Most people plan to retire at age 65. At that point you stop working. At that point you stop earning a pay check. Where will your paycheck come from if you stop working? Your paycheck, if you retire, will come from sources such as pensions and retirement savings. If you have planned your retirement properly, then that income (or most of it) should continue to go to your spouse if you die. Therefore, if you and your spouse can live on that money together, don't you think one of your can? Incidentally, retired people rarely have dependent children.

If the surviving spouse has the income that they need, why would you need life insurance after you retire? Most do not although there are other reasons for life insurance that I will not be addressing here. Suffice it to say, most consumers need term insurance and level term is the best kind to buy.

Therefore, the longest period of time that you would need to buy life insurance is to the point that you retire. If you are age 45 (like me) and you need term insurance to age 65 (like I do), then it would be a good idea to buy a 20 year term policy with a full 20 year premium guarantee (like I recently did). By doing so, I have just purchased what should be the last term policy that I will ever need to buy. Therefore, Triple-X will not affect me, because I have purchased the last term policy I intend to own.

If I was 35, I would buy a 30 year term policy. If I was 50 I would have bought a 15 year term policy; whatever it takes to get you to the point you stop working.

In the case of my young adult children, I have acted, and I am still acting, to buy level term policies which guarantee future premiums for 40 years. While I would normally not insure such children (they are still dependent and do not contribute to our family's finances), I know that Triple-X will eliminate their ability to get today's guarantees, at today's prices. Knowing that they will need insurance in the future, I am guaranteeing their right to have fully guaranteed level term by buying it now, before I can't buy it at today's competitive prices. I urge all such young adults to do the same.

PREVIOUS <<< 1 | 2 | 3