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Life insurance quotes and the question of retirement

When the industrial revolution swept people off the land and into the cities, little changed for the average worker. The majority worked for as long as they were physically able and then died. Indeed, there has been a distinct pattern of the breadwinner dying shortly after quitting work. It was as if laying down the burden of earning enough to live on meant a loss of motivation to carry on living. This trend slowly reversed as medical science improved. As retirees realized they might live longer, they began a push to retire earlier so they could enjoy some leisure time funded by savings.For many in the better paying, middle class jobs, this meant planning for retirement in their fifties or early sixties. This is highly relevant to the life insurance industry because the calculation of the annual premium rate depends on expectations as to how long people will work and earn a living. If people stop working, this assumes most of the larger debts have paid off and that spending can be managed out of income derived from investments.

This led to two modest innovations. First policyholders were allowed to change the amount they paid. When pay levels were high and there were no other commitments, it was useful to be able to maximize tax-free payments into a life insurance fund. The second innovation was to allow life insurance to be convertible into an annuity. When the cash value was used to buy an annuity, thus produced a monthly income to add to the family funds. But in the 1990s, the trend to early retirement slowed.

After the crash into recession in 2008, the majority of people are now retiring later. This reflects a major change in the economic situation. The benefits of health insurance offered by employers have been under pressure and this can lead to an awkward gap in coverage until Medicare comes along at the age of 65. Now add in the reality that people are living significantly longer. This means people need that much more in savings to carry then through this extended lifetime. With households losing about 5% of the value of their savings in 2008, this has increased the pressure to keep on working. This does not deny the economy has been slowly picking up. But it reflects a loss of optimism. The majority now expect life to be tough and are working for an average of two more years. This is likely to continue until house values begin to recover. Even then, people may not retire because they enjoy their jobs too much. All this is putting pressure on the life insurance industry and you can see changes in the life insurance quotes being issued as insurers reflect the probability policyholders will work for longer and so pay more into the policy funds. If this continues, you can expect to see life insurance quotes falling slightly or sale in the number of convertible policies increasing.

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