As many of you are probably aware, states are adopting the new 2001 CSO (mortality) table which has had life insurance companies busy redesigning their products. Basically the new table reflects the fact that people are living longer these days than they were compared to the old 1980 table. Now that people are living longer, life insurance should be cheaper!
I’ve seen that quotes for insurance have come down but not in a ‘wholesale’ type of fashion. Generally the change will only have a small impact on the average consumer, and I would be wary of anyone that told me I should replace my existing (life insurance) coverage because this new table is being adopted. There are other factors that should be considered irrespective of the table.
However, if you are in a situation where a cash value life insurance product (e.g. VUL) makes sense, you will want to be sure to evaluate your options before insurance companies stop selling 80CSO (old) insurance products December 31, 2008. This is because the definition of life insurance cost and modified endowment contract definitions are based on the prevailing table (soon to be 2001CSO).
Basically if you want to pump a lot of money into one of these policies (overfund), you should look into the old contracts while you still can. Again, I would be very wary of information you come across on this; remember, most life insurance is “sold” not bought by people.
Finally, consider that insurance companies and brokers are always trying to squeeze out as much profit/commissions as they can from the (life insurance, and other) products they sell. As the transition to the new table concludes, companies may over/under price their new insurance products – so be sure to shop around!
Posted by moneynuggets 