Increases in Universal Life Insurance Policy Premiums As High as 100%

Individuals who purchase a universal life insurance policy expect for it to be a long term investment for them. Many do not expect premiums to increase so much that they may lose their policy altogether.

What is a Universal Life Insurance Policy?

There are a couple types of life insurance policies that are typically purchased by insurance holders.

A term life insurance policy is a policy that provides coverage for a specific amount of time. It is purchase for specific amount of time and its coverage ends when the term ends. A term policy is not an investment: the only time that money is returned to the policy beneficiary is when the policyholder dies.

This type of insurance policy is considered more affordable, as the premiums are usually lower than other types of insurance policies.

A universal life insurance policy is quite different. It is considered an investment and works very differently than a term life insurance policy.

A universal life insurance policyholder pays premiums that contribute to the “cash value” of the policy. The policy also has a interest rate that is deposited into the value of the policy.

What the insurance company deducts from the cash value of the universal life insurance policy are administrative expenses and something known as Cost of Insurance, or COI. The COI is calculated based on a complicated set of factors including mortality rates.

Universal life insurance is generally considered to be beneficial and a good investment for policyholders.

COI Increases for Universal Insurance Policy Members

However, in recent years, because of steep variances in interest rates, critics claim the Cost of Insurance for many universal life policies has increased dramatically.

What this means for policyholders is that if the COI increases, the premiums also increase to offset the COI for the insurance companies. Some of these increases are so high that policyholders cannot afford to pay them any longer. In fact, many customers are claiming that these increases are unfair and have been put in place to benefit the bottom line of the insurance companies.

Many policyholders can no longer afford to pay these increased premiums and are forced to forgo their investment and find a different life insurance policy.

But a lot of individuals who have purchased a universal life insurance policy did so years ago. Now that they have aged, they may not be able to find an affordable life insurance policy that will cover them.

Some companies have seen universal life insurance policy premium increases by 100%. In fact according to the New York Times, the Consumer Federation of America requested that the National Association of Insurance Commissioners to investigate rate increases for universal life insurance policies.

Many increases were in the 38% range, but some have been as high as 100% increases. This is simply too high for most policyholders to weather.

The Times reported that the Federation’s actuary wrote a letter to the Insurance Commissioners stating, “It does not take much imagination to imagine that millions of U.L. policyholders will be adversely affected if insurers are free to raise” their rate schedules.

Many consumers and consumers’ advocate groups believe these increases are attempting to make shareholders happy at the expense of those who have purchased policies and that these increases are a breach of the insurance companies’ obligations to policyholders.

If you believe you have been unfairly and adversely affected by an increase in your premium for your universal life insurance policy, you may be entitled to legal compensation.

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.

Join Now