For the first time since 1994, term life insurance rates are beginning to increase about 10-15% and we expect this trend to continue.  In addition, a popular term product known as return of premium may be disappearing. As you may recall, ROP products address many disadvantages of traditional term policies. They are a bit more expensive then traditional term, but they offer a full refund at the end of the term it. In recent years, consumers that bought ROP can expect a 4 to 6 percent return – a bit better than other safe investments these days.

Thus far, the following carriers have either pulled or raised rates on their ROP products and we expect more of the same in the coming months:

• ING is pulling its basic ROP
• Genworth withdrew its product
• AIG American General is raising its rates by about 50% making the product very unattractive

Reasons for these changes include:

• Pressure on reserves
• Depressed investment return
• Capital solutions that help fund guaranteed term and universal life products are more scarce, and where available, their cost has increased significantly
• A non-forfeiture rule Actuarial Guidelines 45 (AG 45) going into effect at the end of the year that will require an earlier increase in the cash value for ROP term products (NAIC)

The message is clear…if you are interested in affordable term life insurance or a return of premium policy, act quickly. And if you already have a discount life insurance policy, hold onto it with both hands.