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Will Global Warming Increase My Life Insurance Premium?

Many people buy term life insurance because the price is typically lower than permanent insurance. Of course, that low price is guaranteed for a set amount of time (as opposed to the life-long guarantees that are available with whole life and universal life). Term policyholders therefore need to keep their eyes on the horizon for the time when their policy will renew. That renewal premium could be exorbitant; as a matter of fact, it could be so high that the policyholder could not or would not keep the policy in force. Unfortunately, if coverage is still needed at that time, then a policy lapse could put the family, business, or estate of the former insured in jeopardy. So a big rate increase could cause a big financial problem.

What makes a life insurance company renew a term policy at such a high premium? I have seen a number of reasons for this. Let’s suppose an insurance company is concerned about its reserves or credit worthiness. It is not necessarily in a critical situation, but it does need an infusion of cash. The renewal of term policies is a time to bring in more money.

Or, let’s suppose there was a merger or acquisition. The new parent entity may want to divest itself of an unprofitable block of business. It could raise the rates of renewing term policies so high that policyholders would be driven away. Once the contractual premium guarantee expires in a term policy, the company has an opportunity to address larger world and economic events that are squeezing it for cash.

Some of the world and economic events that can cause a life insurance company to drastically rebalance its cash picture are indeed extraordinary. They include plagues, epidemics, wars, and huge natural disasters such as floods. These can feature an appalling loss of life. There could be horrific property damage. The humanitarian and financial resources of many governments could be taxed. The combined effect of all this misfortune can indeed strain not only individual life insurance companies, but the insurance industry as a whole. So those of us who are concerned about price stability in the life insurance marketplace, need to keep an ear open to forecasts of potential catastrophes.

That brings us to the topic of global warming. This scenario alleges that carbon dioxide being emitted by human industry (greenhouse gasses) is warming the earth to such a dangerous degree that utter catastrophe is inevitable. Cyclones, hurricanes, and droughts will lead to multinational war and millions of refugees.

Do we really have to worry about this? Will we suffer massive death and destruction? Will the rates for life insurance skyrocket as part of global economic upheavel?

Here is your answer: no. And here is why not:

1) The claim by the current administration that “97% of scientists agree that climate change is real, man-made and dangerous” is patently false;

2) Hard scientific facts (thank you Peter Ferrara) not only refute a global warming trend, but actually show signs of cooling;

3) A multitude of experts – many of whom were once riding the global warming bandwagon – now challenge the proposition (thank you Dennis Prager);

4) The “religious zealotry” of environmental extremists (and by the way: I am an environmentalist) can account for their blind faith in this belief.

All told, global warming is a non-issue. At least that is one thing that will not drive our rates for term insurance sky-high.

What is your opinion?