The life insurance rate you were quoted last month is mostly likely not available anymore. That's because a lot of companies have raised the life insurance rate over the past six months. Why? Because the life insurance rate is very sensitive to the availability of credit, and life insurance companies have been strapped for cash, just like every other business in America.

Life insurance companies have to borrow to finance the first few years of a policy's life, because the life insurance rate is set low due to competition. The policy loses money during the first few years due to acquisition costs, including the marketing, sales, and underwriting that the company must perform to obtain the business.

Here is an example from a life insurance company who raised the rate in May. This is for a male non-smoker age 40, who wished to buy $500,000 of 30 year term life insurance. The life insurance rate had been $655 per year in April, but it was increased to $695 in May. This is a one month increase of 6%. It gets even worse for older clients and for large face amounts. Considering the same individual wanting to obtain $2,000,000 in coverage, the life insurance rate would be $2,740, a 14% increase over the previous rate of $2,410.

Why is the rate increase so much bigger for large face amounts? Because life insurance companies depend on re-insurance companies when underwriting large policies. Re-insurance companies act as wholesalers to the retail companies who need to spread the risk on larger amounts of coverage. Re-insurance companies, who have even larger capital requirements, are being hit even harder by the credit crunch. They are responding by aggressively raising the life insurance rate needed to cover the capital.

If you are currently in the market, don't let the life insurance rate go up any more before you decide on a policy. Act now to avoid future rate increases. Not all companies have increased the life insurance rate yet, but you can bet on one thing: they will. You should start your comparison shopping right now. Just follow this link to get a list of the top 15 companies and rates for your requirements: