Costs head downward for term life insurance

Prices for term life insurance are starting to plummet again, three years after companies warned that a new state regulation would drive rates up sharply.

Savings Bank Life Insurance, which bills itself as the "no nonsense life insurance company," cut its prices last month on term policies an average of 15 percent, but for some age groups and some coverages the company says it cut its prices as much as 49 percent.

Firing the first shot in what many expect to turn into a price war, Woburn-based SBLI is now running ads promising savings of up to 50 percent over the prices charged by such other insurers as John Hancock Financial Services of Boston and Massachusetts Mutual Life Insurance Co. of Springfield.

Robert Sheridan, SBLI's president, indicated the price war has been pretty one-sided so far, with his company doing all the shooting. "I don't know if other people are playing possum or what," he said.

Officials at John Hancock and Massachusetts Mutual could not be reached to comment, despite repeated calls. Milton Brown, who runs Insurance Information Inc. in South Dennis, predicted the rate cut by SBLI and an earlier one by USAA, a Texas insurer that caters to US military personnel and their families, will eventually spur a price war.

Bob Barney, who runs a Tennessee company called CompuLife that tracks prices for term life insurance, said price cuts are overdue. "Term life insurance is way overpriced," he said. "Contrary to popular opinion, your risk of dying is not all that great if you're in the preretirement age range."

For a 35-year-old Massachusetts nonsmoking male in good health, CompuLife's comparison website, Term4Sale.com, lists 50 policy options with terms of 30 years and a death benefit of $500,000. The lowest-priced option was SBLI, with an annual premium of $465. The highest annual premium was $690. The average for all 50 policies was $619.

Term life insurance is very basic. There's no savings or investment component. The only payout comes if you die. It's heavily geared to healthy nonsmokers who want a simple way of protecting their family financially should they die.

A little over three years ago, term life insurance companies were warning consumers to rush out and buy policies before prices skyrocketed with the implementation of an ominous-sounding new regulation dubbed Triple-X. The regulation increased insurance company costs by requiring them to stockpile more cash, or reserves, to cover future claims.

Now those reserve requirements are starting to ease again, largely because people are living longer and filing fewer claims. The average woman's life span has increased from 77 to 79, while the average male's life span has gone from 70 to 74.

Those statistics were gleaned from a new mortality table developed by the National Association of Insurance Commissioners, which is now up for adoption in all 50 states. Massachusetts approved the table for use by companies here last month.

Mortality tables are a big deal in the insurance business but particularly for term life. The tables dictate the reserves a company must keep on hand to pay future claims. The tables have only been updated a handful of times in the last century, most recently in 1980 and before that in the 1950s.

SBLI has cut its prices in every state in which it does business, even though only a few of those states have adopted the new mortality tables. Only 19 states have adopted the tables so far, and it could take years before all 50 do.

Sheridan and Jim Loring, SBLI's senior vice president and chief financial officer, said they have heard no objections from the states that have not yet adopted the new mortality tables. "There is some risk, but we factored that into our pricing as well," Loring said.

Barney at CompuLife said he did not think any company could change its rates to reflect the new mortality tables until all of the states in which it does business adopt them. He said the real price war over term life insurance, particularly for 30- and 20-year policies, will come when all of the states adopt the new mortality tables.

"It's really right now in the hands of state regulators," he said. "If regulators get off their butts and approve the new tables, consumers will see prices come down significantly."

Phish bait Computer in-boxes are being inundated with phony e-mails from groups trying to trick consumers into divulging their personal financial information.

The practice, dubbed phishing, is accelerating at a rapid pace. The California-based Anti-Phishing Working Group, a group of companies working cooperatively to track and block phishing, says there were 176 new types of phishing attacks in January, a 52 percent increase over December.

Dan Maier, a spokesman for the group, estimated about 5 percent of recipients actually divulge their information.

The bogus e-mails, which appear to come from companies like eBay, Citibank, Paypal, and AOL, typically say the company needs to verify the recipient's account information and ask the consumer to provide it.

Most of these bogus e-mails are fairly easy to spot, but they are becoming more and more sophisticated. Some have included a Trojan attachment that recipients are encouraged to download and run, unleashing a program that monitors the computer for keystroke patterns that resemble credit card or Social Security numbers.

Another attack offers a link to Citibank's actual website, with a login box overlaid over the home page. When a consumer logs in, his personal information is whisked away to Russia.

Two colleagues here at The Boston Globe recently received e-mails saying their credit cards had been billed for purchases of child pornography. The messages said they could cancel their purchases by contacting the company via a toll-free phone number or a website and providing their credit card information.

Maier was familiar with the pornography pitch, saying it was designed more to build spam e-mail lists. "If they get someone's credit card number, that's gravy," he said.

Bruce Mohl can be reached at mohl@globe.com.