A. It is true that life insurance premiums are at their lowest levels in 20 years, here is why:
There are 3 major factors that determine life insurance premiums:
- Insured person's mortality rates
- Insurance company's business expenses
- Insurance company's ability to earn interest through investments
There are several major factors that impact the above 3 factors:
Longer Life
It's a fact that people are living longer, this allows life insurance companies to offer lower rates.
Also, access to technological advancements like “big data,” artificial intelligence, and machine learning have helped insurance companies improve their predictions for life expectancies. This predictive algorithm can potentially better identify individuals with lower risks of premature death and, in turn, offer them lower rates.
Lower Reserve Ratios
Regulations now require insurers to leave less money in their reserves, this means insurers don't have to keep larger amount of cash that they likely won’t need and could invest the rest for optimal investment returns.
Advanced Technology
Technology has helped to streamline the insurance underwriting process immensely. Instead of taking many man-hours to determine your rates and other policy details, advanced software applications can take care of the lengthy process. This increased efficiency has allowed insurance companies to cut their costs and pass the savings along to their customers