Historically low interest rates are beneficial to consumers in many ways (such as lower costs for mortgages, auto loans and credit cards, to name a few), but insurance companies have quite a different perspective.
These low rates greatly impact the return from investments made by insurance carriers, meaning they have less of a profit margin when interest rates are in a low-yield environment.
When interest rates are low, insurance companies make less money and are challenged to find ways to make up the difference.
This means that policy premiums are going up-in some cases by a substantial margin.
A number of well-known national insurance companies paint a bleak picture.
For example, many of these companies have increased universal life policy premiums anywhere from 9 percent to 29 percent for a non-smoking, 60-year-old male compared with 2012 rates.
Dividend payments on whole life policies are less than projected and policies that credit an interest rate (such as the universal life policy above) also are going up in premium.
In addition, long-term care insurance policies are affected with some carriers increasing rates as much as 40 percent.
In fairness claims for long-term care policies have been higher than expected as well.
So what gives? The Bigger Picture To help make sense of the impetus for these premium increases, let's look at the types of investment insurance companies hold.
The M Group, reports that the 25 largest insurance companies (in terms of in-force permanent life insurance) diversify their investment portfolios as follows:

• Bonds, 70%
• Mortgages, 11.
  2%
• Common stocks, 4.
  1%
• Real estate, 0.
  6%

Insurance companies invest in bonds and mortgages because they offer current income and can be laddered to meet their projected liabilities.
Insurers can historically take advantage of investing in longer term (higher yielding) debt since many of their liabilities are longer in nature.
However, even long-term bonds are at historically low rates-for example, the 10-year U.
S.
Treasury bond is in the neighborhood of 2 percent, as of this writing.
Again, lower rates translate into smaller profits for insurers.
Although the current investment environment for insurance companies is difficult, help may be on the way.
Money supply is at an all-time high due to the Federal Reserve's accommodative monetary policy.
Still, the problem is the velocity of money-the rate at which money exchanges hands-is at an all-time low.
Individuals and companies are still paying off debt instead of spending and borrowing.
This de-leveraging process has created a very slow growth environment for the U.
S.
economy and thus low interest rates.
Ultimately, the Fed's policies should be successful in promoting higher levels of growth.
When insurers are feeling the pinch, the pain is passed down.
The silver lining is hard to see, but it's there if you squint: Economics is cyclical and interest rates will indeed move back up-eventually.