- Life insurance queries gaining as economy picks up
- December 6, 2013
Despite pressures from the slow economic recovery and low interest rates, the U.S. life insurance industry continues to remain strong as disclosed in an October 2013 Moody’s special comment: “U.S. Life Insurance: Industry Scoreboard.” Families continue to look towards life insurance to protect their loved ones.
“In general, the sector is characterized by high levels of capitalization, solid liquidity, high-quality investment portfolios, good financial flexibility and profitability that has improved modestly over the last few years but remains under pressure,” the report states. “Companies have generally continued to de-leverage and de-risk their product portfolios and rationalize their allocation of capital to businesses in order to strengthen their credit profiles.”
The still-low interest rate environment will continue to compress spread margins for fixed annuities and universal life insurance, and pressure profits from long-tailed liabilities such as disability income, long-term care, payout annuities, and variable annuities with guarantees, says Moody’s.
In any kind of economy, life insurance is a sound investment for protecting one’s family, especially if there are children or dependent older adults involved. Generally, industry experts suggest that a person should carry insurance coverage equivalent to between five and seven times their annual income. However, again, one dependent versus five will project a different life insurance need especially when it comes to college expenses. Calculating can be tricky, according to Kiplinger, since college costs have been rising every year.
Personal circumstances will always reflect the type of coverage that will be most appropriate for you and your family. Those that will cover mortgage costs, debt, medical conditions, education and final expenses can vary from one household to another. How many years will you need of insurance?
Consulting with an insurance advisor offers the best result when purchasing the right policy in the long run.
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