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Prudential said it would suspend its acceptance of applications for 30-year term life insurance policies due to “unprecedented market volatility” and “the anticipated low interest rate environment for the foreseeable future.”
The suspension will be in place until June.
“It’s not shocking that a major life insurer like Prudential is suspending its 30-year term life coverage until June,” Les Masterson, managing editor at Insure.com, told FOX Business. “There is so much in flux right now. Insurance companies don’t like volatility. Their business is all about preventing risk.”
Life insurance is typically used to cover people who depend on you financially – it pays a tax-free death benefit to designated beneficiaries. It is often taken out by people with life-changing events, like starting a family or buying a house. When you are younger the rates tend to be lower.
So what does Prudential’s decision mean for you? It’s one fewer life insurance coverage option individuals have to choose from, Masterson said.
Prudential is the second-largest life insurer in the U.S. based on net premiums written and the third-largest seller of individual life insurance based on new and recurring premiums. Its individual life insurance business focuses on middle-income to upper-income households. It has about $4 trillion worth of gross life insurance in force across the globe.
However, options could be further limited over the near term if more insurers follow Prudential’s lead. Masterson said it is entirely fathomable other insurance companies could take steps of their own to limit risk.
Many people may be evaluating insurance options in light of the ongoing coronavirus pandemic. When it comes to whether your insurance will pay out for deaths from coronavirus, experts at NerdWallet said most people are covered under traditional and term life insurance policies.