Universal life insurance now offers "term-like" rates for your whole life. When buying life insurance in the past, most people chose term insurance because it seems to be the most cost-effective plan to cover a period of time when they need the maximum insurance. In the past, the longest guaranteed period offered by insurance companies was 30 years. Sometimes, depending on age, the maximum might drop to 20, or even 10 years.

When a life insurance need is indeterminate or lifetime, such as making sure your family will receive insurance proceeds at death no matter how old you are, the three main options were whole life, a combination of whole life and term, or In order to guarantee rates to 100, one needed to pay approximately double what a normal projected rate might be for a whole life and term combination, universal life, or the guaranteed whole life rate.

Many companies have now come out with a universal life insurance plan with premiums payable to age 100 and coverage that stays in force until age 120, or longer. The rates are completely guaranteed and can never be increased, regardless of the interest rates paid by the insurance company, or the mortality charges. These rates are approximately the same as the universal life or whole life and term combination bought on a low cost basis.

How can the insurance companies magically guarantee plans that could never be guaranteed before? The answer is that the death benefits are reinsured by "reinsurance companies" which charge the insurance company the approximate equivalent of a guaranteed term rate to age 85.

In the past, when an individual bought a universal life insurance policy, that plan stood on its own and had to stay in force based on its own earnings and guarantees. The new program puts the risk on the reinsurer and they pool these policies with thousands of other people buying similar insurance. Therefore, if the average person lives to age 85, insurance companies will not only not lose money, they make money as they always do.

Recently, I worked with a client, age 60, who wanted a 30-year term policy. This person had some medical issues and would be rated standard with most companies. The annual cost of 30-year term insurance was approximately $4,800 and the cost of term to 100 was $4,600. The term insurance built no cash value at all and the term to 100, based on a universal life insurance policy, built up substantial cash values. In this situation, it made no sense to take the term insurance when the universal life insurance was cheaper and provided cash values in the event the insurance was no longer needed.

When looking at your insurance needs, don't be afraid of the cost of permanent coverage. The new universal life insurance plans are almost magical in the way that they can guarantee rates to 100, compared to regular guaranteed level term insurance.

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: