Cost of Life Insurance Goes Up, But Reason Could Be to Satisfy Shareholders

In 2016, insurance companies announced the cost of life insurance would increase in 2017. The increased rates were publicly blamed upon many years of low interest rates, but the Consumer Federation of America is concerned that prices were raised to satisfy shareholders.

Most policyholders bought their insurance years ago, and as senior citizens, are now on fixed incomes that cannot absorb a high premium increase. Now that the policyholders are decades older, their chance of finding affordable alternative coverage is slim.

One company saw its cost of insurance increase by 100 percent. Lincoln Financial Insurance premium increases affected 25,000 consumers who hold policies originally issued by Jefferson Pilot Life from 1999 through 2007.

Universal life insurance policies differ from term life insurance policies. Universal life insurance can last for a policyholder’s life and were sold with a guaranteed interest rate. When consumers made a decision to buy a universal life insurance policy, they saw it as a way to build a nest egg they could cash out upon retirement. In contrast, term policies have fixed costs and fixed benefits.

Universal life insurance policies became popular in the 1980s and 1990s when interest rates were higher. Now that interest rates have remained relatively low for the last decade or so, insurance companies trying to satisfy shareholders are increasing the premium cost of life insurance policies.

A recent article in The New York Times says the Consumer Federation of America has asked the National Association of Insurance Commissioners to investigate the rate increases. They question whether the rate hikes, which range from 38 to more than 100 percent, are necessary or if the insurance companies are gouging policyholders in an attempt to quiet shareholders.

Lawsuits Filed Over Cost of Life Insurance

Several insurance companies are facing possible litigation regarding the increased cost of life insurance.

The policyholders allege the price hikes are actually a breach of obligations held under the policies. Transamerica argues it just needs to prepare for future forecasted costs to provide coverage.

Policyholders who do not wish to pay the higher premium can opt for a different policy, allow the policy to lapse, or reduce the death benefit. If policyholders allow their policies to lapse, the insurance companies will most likely benefit because they will have collected premiums for decades, but will not need to pay out a penny.

Among the companies we are investigating over the increased cost of life insurance are:

• Accordia
• Aegon USA
• Allianz
• Allstate
• AXA
• Alexander Hamilton Life (now Lincoln National Life)
• Conseco Life Insurance Company
• Equitable Life Insurance Company
• Great Southern Life (formerly Ohio Life)
• Minnesota Life/Securian
• MetLife
• Monumental Life (now Transamerica)
• NACOLAH Life
• National Life Group
• Nationwide
• Old Mutual Financial
• Pacific Life
• Penn Mutual
• State Farm
• Southland Life Insurance (now VOYA Financial)
• Transamerica
• USAA
• VOYA Financial (formerly ING)

If you purchased a universal life insurance policy and believe the cost of life insurance has increased exponentially, or if your policy’s cash value has rapidly diminished, you could qualify to file an insurance overcharge lawsuit.

Join a Free Universal Life Insurance Class Action Lawsuit Investigation

If you purchased a universal life insurance policy through Lincoln Financial Insurance or another insurance company, you may qualify to join a FREE class action lawsuit investigation and pursue compensation.

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