Customers Face Universal Life Insurance Cost of Insurance Increases

Life insurance cost of insurance increases affect the older aged community of the United States, as universal life insurance rates become unbearably high to policyholders. Several insurance companies that sell life insurance policies recently announced that their premiums would be increasing, with some premiums being hit harder than others.

The increase primarily affected customers who purchased their universal life insurance policies decades earlier, who find it difficult to find more affordable life insurance policies due to their age. Lincoln Financial Insurance was one of the companies to announce life insurance cost of insurance increases to its customers in October 2016.

The Lincoln Financial universal life insurance cost of insurance increases primarily pertain to policies affected by the cost of insurance (COI) going up by 100% and hitting 25,000 customers. These insurance policies were issued by Jefferson Pilot Life from 1999 to 2007,and the premium increase is in response low interest rates and insurance companies being unable to pay out the policies.

“You’re going to see more and more of this happen unfortunately if we continue to stay in a low interest rate environment,” Lenox Advisors Inc partner Gregory Olsen told Investment News.

Other insurance companies affected by life insurance cost of insurance increases for universal life insurance policyholders include: Voya Financial, AXA, and Transamerica. Reports indicate that approximately 1,700 policyholders of AXA’s Athena Universal Life II policies have been hit, along with 26,000 Transamerica’s policyholders.

However, this movement is indicative of the insurance company as a whole, as Transamerica spokesman Gregory Tucker said that universal life insurance policies that were sold at a time of high interest rates will most likely feel the brunt of life insurance costs of insurance increases, according Tucker’s statement to Investment News.

Overview of Universal Life Insurance Cost of Insurance Increases

Universal life insurance policies were very attractive prospects for customers several decades ago. Interest rates were high and these policies had tax advantages, had death benefit sections in the policy, and could be funded through a predetermined sum or continued premium payments.

The cash value of the account can increase based on a minimum guaranteed interest rate provided by the insurance company, but can also decrease due to expenses and insurance costs. Universal life insurance policies differ from term life insurance policies, which are managed through fixed costs and benefits.

Retired individuals who wish to treat their life insurance more like an investment can opt for universal life insurance policies that can increase in benefits throughout the policyholder’s life.

In 2016, the Consumer Federation of America had sent letters to insurance companies in early 2016 requesting the companies review the COI rate increases to make sure it was conducted fairly. According to the Baltimore Sun, consumer advocacy groups were concerned that insurance companies had only done these increases to “protect their profitability.”

Several insurance companies are new facing allegations from customers alleging the companies are abusing their insurance policy provisions to justify the life insurance cost of insurance increases.

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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