For years, longer life expectancies and hefty investment returns have combined to allow life insurance companies lower premiums on term life policies. That downward trend has suddenly reversed as tighter credit rules have made it more expensive for companies to raise cash, at the same time that stock market woes have slashed investment yields. The result is rate increases ranging from 5% to 15% on term life insurance policies. 

The rate boosts end a string of premium cuts that dates back almost 20 years, interrupted only by a brief uptick nine years ago, when insurers were required by most states to build up bigger cash reserves to pay future claims. The policy costs dropped back quickly, however, and continued their downward trend. Savvy buyers took advantage by shopping for a new policy every five years or so to get a lower rate. Insurance experts foresee an end to those good times and, in fact, many counsel that it may be better to shop around for a good rate and then lock it in for a longer term.

Shopping around is more crucial than ever, say the professionals, since not all insurers have raised premiums and some have raised them only on select policies. Premiums may also differ widely depending on your age, your health, the amount of insurance you’re looking for, and the policy term. And don’t count on getting a cheaper policy five or 10 years down the road. If you think you’ll need the coverage for 20 years, you’re probably better off buying a 20-year policy rather than face the possibility of higher premiums and tougher health criteria when the shorter term policy comes up for renewal.