Do Life Insurance Rates Fluctuate with the Economy?

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Whether the economy is thriving or going through a recession, a life insurance policy is one of the best safety nets you can count on to provide stability to your family in case they lose you.

Living through a pandemic has made people more conscious of the uncertainty of life, and while we may not know how long we will live, we can ensure our loved ones are taken care of when we’re not around. This is why, no matter how the economy is doing, buying an insurance policy is always a good idea.

However, does that mean you’ll be stuck paying higher premiums for coverage when the economy is not doing so well? Let’s find out.

The Impact of the Economy on Insurance Rates

Recessions affect insurance policy rates, but it also depends on the type of policy you have—and, even if it seems counterintuitive, buying insurance during an uncertain time ensures the financial stability of your loved ones.

Here’s How Insurance Policies are Priced

The premium you pay is determined by many factors, including your age, health, hobbies, and more. However, insurance rates are determined by a company’s profitability which depends on the company’s expenses, interest rate, and mortality rates. If your insurer’s profitability sinks, their rates automatically go up.

However, short-term fluctuations in the economy don’t necessarily affect the rates of a life insurance policy. Reliable companies are always prepared for economic volatility and can handle it without changing their rates too much.

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Term Life Insurance and the Economy

With term life insurance, your beneficiaries receive a death benefit if you pass away in a set period of time, say 10 or 20 years. However, if you outlive the term, you’ll need to renew your policy or get a new one.

Term life policies are not severely impacted by the economy because insurers take minimal risks with them by keeping the policies active for only a specified duration. Plus, they don’t give out cash value, and there’s no guarantee of getting a death benefit either. This makes term life very stable for those that want short-term insurance.

Permanent Life Insurance and the Economy

On the other hand, permanent life policies have a cash value that you can withdraw or borrow. It also covers you for your entire life if you keep paying your premiums. This is why you may have to pay higher premiums with economic instability and intense market fluctuations.

Here’s Why You Should Consider Life Insurance

Life insurance is a necessary investment regardless of how the economy is doing.
Here’s why:

Financial Protection

Life insurance provides your family financial stability for the worst of times. With your chosen policy, your beneficiaries can cover funeral and burial costs and pay off any bills or debts that you may have. This becomes very tough when the economy is tumbling and your budget is limited.

Paying off Expenses

When an insured person passes away, life insurance ensures their family doesn’t have to struggle to pay off their payments and cover their living expenses. Financial protection will cushion them during economic downturns and ensure they have a roof over their heads no matter what.

Settling Your Debts

If you’re living during a recession, you may lose your job and rely on loans and credit cards to pay for expenses. This builds up debt. With a life policy by your side, your beneficiaries can pay off these debts in case they lose you.

Getting Payouts

Even if the stock market fluctuates, your payout won’t change with life insurance. It’ll provide you with financial security and peace of mind when the market is volatile.

Preparing for the Future

There’s no way we can predict what will happen next. In this uncertainty, life insurance provides you and your loved ones with much-needed financial support.

Work with Us

Make sure you cover all loose ends by opting for permanent and final expense life insurance with Franklin Life & Annuity.

Our premier life insurance agency in Houston, Texas, provides tailored insurance services to meet your family’s financial needs when you aren’t around.

With our all-in-one family life insurance solutions and burial and final expense insurance policies, you can rest assured that your bills will be taken care of at the time of your death, and your loved ones will have financial support.

Get in touch with us today.