The aging of the American population has a tremendous impact on business, and in turn, on what you as a customer have available to you and the price you pay. Take a look at the impact of longevity on the cost of term life insurance.

During the past few months, we have seen a drop in the cost of term insurance, for which you pay a fi xed price for a specifi c amount of insurance for a fi xed period. Why? People are living longer, and insurers base their rates on how long they expect people to live. Longer lives mean they will pay out fewer claims. That means insurers need to put less money in reserves to pay claims, and in turn can lower insurance rates for consumers.

We are frequently asked about the need for life insurance for people who no longer have children at home. There are good reasons to consider term life insurance. Here are five from the Insurance Information Institute:

1. To support other dependents. If you have parents, disabled adult children or others who depend on you for financial support, life insurance would continue this support if you die before they do.

2. To cover the Social Security “blackout period.” It is important to plan for life insurance to pay income to a surviving spouse after their children are grown. Social Security pays nothing from when the youngest child leaves high school until the surviving spouse applies for benefits based on the deceased spouse's record (minimum age for eligibility is 60). This interval is called the blackout period.

3. To offset reduced Social Security survivor's benefits. If a survivor begins receiving Social Security survivor benefits earlier than the full-benefi t age (66-67, depending on when the survivor was born), the Social Security benefit amount is permanently reduced. Moreover, because of the deceased's early death, he or she didn't get salary increases that might have boosted Social Security benefits further.

4. To offset lost income if a spouse dies after starting Social Security retirement benefits. When a couple retires and begins receiving Social Security retirement benefi ts, each one receives an income. The earner with the larger pre-retirement income gets a benefit based on that income, and the person with the smaller (or no) pre-retirement income gets either a benefit based on his or her own earnings record or half of the spouse's Social Security benefit, whichever is greater. When one spouse dies, the larger retirement benefi t continues but the second benefit stops - in effect, a 33% income reduction.

5. To provide bequests to heirs and charities. If you want to be sure that your heirs and/or favorite charities get money after your death, you can designate some or all of your life insurance benefi ts to go to them. This is particularly useful if, without the life insurance, your executor would have to liquidate other assets to meet this objective.

For more information on life insurance, and to get quotes from up to five life insurance companies, go to www.iquote.com.

Steve Zaleznick
CEO, Longevity Alliance

©Longevity Alliance, Inc. 2006