It's not a consumer trap or anything nefarious, it's just a mathematical reality that the fixed term period is based on 'net risk' and that once an insured crosses outside the fixed period the rates must increase dramatically to offset adverse selection.
Chicago, IL (PRWEB) July 24, 2014
YourLifeSolution.com, a service which objectively and instantly compares life insurance products entirely online, is today publishing an analysis of a pitfall inherent in many term life insurance policies. The stated goal of doing this is primarily to prevent consumers from falling prey to their own short-sided buying decisions. “Consumers who purchase term life insurance policies don’t normally realize just how much their rates can increase after the fixed term price. In many cases the rates increase by more than 20 fold and then increases about 10% each year thereafter. The mathematical reasoning for this is entirely legitimate, but it’s important for consumers to be more aware of this flaw. Consumers must plan accordingly, make sure their term life insurance policies are convertible to permanent life insurance with no underwriting guidelines, or at the very least, carry a small permanent term life insurance policy in unison with the term policy,” said Eric Smith, the founder and independent agent of YourLifeSolution.com.
YourLifeSolution.com stresses that the rates in term life policies must increase drastically after the guaranteed period in order to make life insurance rates cost-effective during the guaranteed period. “It's not a consumer trap or anything nefarious, it's just a mathematical reality that the fixed term period is based on 'net risk' and that once an insured crosses outside the fixed period the rates must increase dramatically to offset adverse selection,” said Eric Smith.
Consumers interested in accurately researching the best rates for their own life insurance can do so at YourLifeSolution.com. Information about life insurance can also be obtained by phone at 888.374.2764.