BUT MANY STAY WITH OLDER, EXPENSIVE PLANS OR HAVE NONE

NEW YORK - Life is getting cheaper.

Aging populations, the Internet and a number of other factors in recent years have forced down the cost of term life insurance.

Still, many Americans are holding on to more expensive policies bought years ago or simply haven't insured themselves highly enough.

And yet it is cheaper than ever to do this.

"It has been mind-boggling," said Byron Udell, founder and chief executive of www.Accuquote.com, a Web firm that contracts with more than 40 insurance companies. "I don't know how much cheaper it can get."

Udell cites this example: In 1990, a healthy 40-year-old man would have paid $1,405 a year for $500,000 in insurance for a 20-year period. That same policy now costs less than $400.

If that person is healthy, he could save money by replacing the older insurance with a new 10-year term policy for $525 a year or a new 20-year term policy for about $1,000 a year. The savings typically are even higher for policies for $1 million or $2 million in coverage.

Mike Kalen, executive vice president of Hartford Financial Services Group Inc.'s individual life division, attributed the decline to a number of factors, including longer life expectancies and improved technology. Insurance companies, he said, have gotten more efficient at collecting information and assessing potential candidates.

The Internet also has made the business more competitive, Udell said.

Yet many consumers either don't have life insurance or don't have enough. About 24 million U.S. households (more than one-fifth) have no life insurance, according to Limra International, a Windsor, Conn., association that provides research and other services to financial-services companies. Among those with coverage, 40 percent think they don't have enough.

Consumers cite a number of reasons for not making the purchase, including procrastination, confusion and concerns about cost. About 20 percent say it is unpleasant to think about dying.

The most common and affordable life insurance is a term policy. As its name implies, it is temporary. Most companies offer coverage for 10, 20 or 30 years. The only way to collect is if the holder dies during the term.

In contrast, whole-life insurance is a permanent product that has a guaranteed cash value but is more expensive and frequently used for estate planning.

One relatively new product is the return of premium term insurance, or ROP. It generally has lower costs than whole life and guarantees the refund of the premiums at the end of the term, assuming the policy owner hasn't died.

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By Jilian Mincer
ASSOCIATED PRESS

Copyright © 2006The McClatchy Company