Life insurers squeezed by law rates

Life insurance rates have generally declined, as mortality rates in the 40-65 age range have decreased.  That has particularly impacted term life  rates, as it is people in that age bracket most likely to maintain term insurance, either through ERISA employer group plans or individually. 

As this Wall Street Journal article notes, life insurance companies make their money by rates of return on the premiums they receive, along with using sophisticated actuarial models to determine the chances of paying out death benefits.  But low rates have complicated the assumptions:

In another sign of the toll of low rates, MetLife in January announced plans to divest itself of a chunk of its life-insurance operations, some of them highly rate-sensitive. One Wall Street analyst called it a “bad bank” for growth-challenged products.

Fortunately for employees seeking term life insurance through their employer, the fallout will primarily impact whole life and long term care policy owners.