Increased Universal Life Insurance Policy Premiums Leave Elderly With Few Options

The elderly and retired community across the United States are complaining their initial universal life insurance policy is now unbearable due to rising costs of insurance.

Several insurance companies that sell universal life insurance policies had announced their premium was would go up significantly in 2016, which has caused significant concern in long time customers who had signed up for their universal life insurance policy decades ago.

Lincoln Financial Insurance was one of the companies that announced its universal life insurance policies would be affected by the cost of insurance (COI increase), with policies going up by 100 percent and affecting 25,000 policyholders.

The primary universal life insurance policies affected were issued by Jefferson Pilot Life from 1999 to 2007, leaving policyholders to contend with the significant price changes or try their luck in finding a new life insurance policy.

Due to their age, many of these customers complained that they were unable to find a more affordable solution.

According to a recent articles from the Wall Street Journal, other insurance companies have given similar announcements to tens of thousands of their policyholders.

Consumers who signed up for a universal life insurance policy as far back as the 1980s now face significantly more expensive premiums that can cost consumers up to thousands of dollars each year.

An article from the Baltimore Sun stated that insurance companies Transamerica AXA Equitable and Voya Financial had both increased their insurance premiums.

Overview of Universal Life Insurance Policy Problems

When a customer opts for a universal life insurance policy, the individual is expecting their insurance will work like an investment and reward the policyholder throughout their life.

In contrast other life insurance policies may be under fixed costs and fixed benefits, which are less risky but cannot gain any further rewards. Many customers were opting to sign up for a universal life insurance policy during the 1980s and 1990s when interest rates were fairly high.

However after interest rates have remained significantly lower, insurance companies have been reportedly experiencing difficult in paying out universal life insurance policies and their large benefits packages.

After insurance companies announced the COI rate increase, the Consumer Federation of America had sent letters to state insurance commissioners in early 2016 to review the premium increases. The organization had requested this process, due to alleged concerns of the insurance companies increasing rates to increase profitability.

Insurance companies have argued against these accusations, with a Transamerica spokesman writing an email to the Baltimore Sun explaining the struggle insurance companies face with low insurance rates.

According to Maryland insurance commissioner Alfred W. Redmer Jr., “[t]he cost of insurance is supposed to be based on the current mortality tables, which have nothing to do with the interest rates.”

Customers affected by increased premiums may be able to file legal action against their insurance companies, and should contact a specialized attorney to determine eligibility.

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