Life insurance companies have been doing some spring cleaning in the form of price changes for term life policies.

In the rearview mirror

For the past decade, life insurance rates have been on a downward slide due to number of factors, according to Steven Weisbart, chief economist of the Insurance Information Institute: People have been living longer. Rates had to become more competitive when buyers could compare prices online. The cost of reinsurance for life insurers was low. Life insurers have lowered expenses through means such as automating processes that used to be manual.

Rate-increase announcements reveal that the bottom of some term life insurance prices may be behind us. The development is a turning point for the industry, where life insurance shoppers have enjoyed continuously falling term life prices for about a decade.

For life insurance shoppers, this means there's no better time to initiate an application and lock in a rate. If you've been pondering a quote you received a few months ago, recheck it — it may have changed. It's important to note that not all companies have announced price increases, and all-time low rates are still available from many insurers.

Companies that are adjusting prices are not always doing so across the board: Some are introducing a mix of increases and decreases that vary by customer age, the policy's term or the coverage amount. Sometimes percentage increases are small for certain age groups but double-digit for others.

Here's a sample of what insurance companies are doing:

Genworth enacted rate changes in January 2009 that are a mix of increases and decreases. Spokesperson Tom Topinka says "LIMRA data shows that 95 percent of term policies written in the U.S. are $1 million in face amount or less. This is an important and still underserved consumer market. In January, we introduced new, more competitive pricing to serve this target market."
Hartford Life has not changed rates recently.
ING Reliastar raised some rates in April and held others steady, depending on the applicant's age, coverage amount and term. The company explains that increases are due primarily to rising costs associated with carrying the considerable reserves required for these policies, linked directly to the credit crisis.
Lincoln National Life adjusted rates both up and down in March 2009, primarily based on coverage amounts.
MetLife has made no recent rate changes.
New York Life senior vice president Scott Berlin says, "We have no need to and no plans to raise rates on term life insurance at this time. At other companies, capital concerns may require raising rates, especially on longer duration term."
Northwestern Mutual has not changed rates and doesn't plan to this year. The company is paying dividends to holders of many policies, including older term policies.
Pruco Life Insurance Co. introduced both increases and decreases in January 2009.
SBLI has made no recent rate changes.
State Farm rates have remained stable.
Transamerica has made no recent rate changes.

Since term life prices have been so low, even rate increases don't necessarily mean that "good" rates are out of reach. Alan Lurty, senior vice president and head of retail life business development for ING, notes that "it is important to remember that term life insurance remains extremely affordable for American consumers. As an example, a 35-year-old man who is a nonsmoker and in good health can obtain a 20-year policy with a face amount of $500,000 for about $25 a month."

The dismal economy is partly to blame for some price increases. Steven Weisbart, chief economist for the Insurance Information Institute, says term life rate increases can be due to a number of factors.

"One possibility is that reinsurance is becoming less cheap," he says. Reinsurance is the coverage that insurance companies buy to protect themselves from losses. "The cost of capital is going up everywhere and for everything. This puts pressure on prices to go back up." But also, Weisbart says that life insurance companies have been fairly aggressive in lowering prices over the past several years, "but some companies may have felt that the pendulum went a little too far." That's why we see rate adjustments for certain age bands and coverage levels but not others.

In addition, rate increases for younger buyers could be due to a change in mortality, meaning death rate. For buyers ages 25 to 35, where death by illness is relatively rare, "A minor uptick in auto accidents or homicides could turn around what appeared to be a downward trend," explains Weisbart. And that data can change insurance rates for the age group.

So how should a life insurance shopper navigate these changing waters? Here are some tips:

• The central advice for life insurance shopping remains true: Shop around and compare rates from multiple companies. All-time low rates are still out there.
• Get rate quotes for more than one coverage amount. Rate adjustments are not being seen across all policy sizes. You can still get historically low rates at certain coverage levels, depending on the company.
• If you received a term life insurance rate quote a few months ago, check it again. It may not be valid today, or it may not be valid much longer. You can lock in a rate by submitting your application.
• Many companies have not announced price changes. Rather than being scared away by news of rate increases, use this as an opportunity to lock in a good rate in case additional increases take effect.
• Know about ways to save money on life insurance.