Life Insurance Cost of Insurance Increases Announced

Life insurance cost of insurance increases are severely impacting the lives of the country’s elderly, who opted for universal life insurance policies before the rates significantly increased. It was announced in 2016 that life insurance cost of insurance increases were planned from insurance companies that offer universal life insurance policies.

The life insurance cost of insurance increases reportedly occurred due to many consecutive years of low interest rates, which was mentioned in the early 2016 letter sent by the Consumer Federation of America.

The federation had sent letters to state insurance commissioners, requesting they analyze the cost of insurance (COI) rate increases to determine if the raised prices were conducted fairly. This advocacy group sent these letters due to concerns of insurance companies doing these insurance increases “to protect their profitability.”

According to the 2016 announcement, some insurance companies have life insurance cost of insurance increases by 100%. One insurance company is Lincoln Financial Insurance Company with a 100% increase, which affects approximately 25,000 policyholders.

Due to the popularity of universal life insurance policies in the 1970s and 1980s, a time when interest rates were high, the average citizen impacted by these life insurance cost of insurance increases are older aged adults.

Overview of Life Insurance Policies

Customers are typically offered two types of life insurance policies, term and universal, both of which are meant to benefit policyholders later in life. Life insurance policies are meant to protect the financial interest of the policyholder, to insure their finances provide their partner with security and other benefits.

Due to the importance of life insurance, it is important for consumers to understand both variants of life insurance so they can make the most suitable choice. Term life insurance, or whole life insurance, provide protection for accidental deaths and debilitating injuries over a designated period of time.

Policyholders pay premiums to the insurance company, and in the case of the policyholder’s death, the company is supposed to pay the beneficiaries named in the policy. Term life insurance policies are paid on fixed premiums, which means their rates are stable and typically lower than universal life insurance policies.

Universal life insurance policies are treated more like investments, with insurance companies making deductions based on the cost of insurance that are dependent on interest rates. With the remaining cash value going to the policyholder, universal life insurance policies were considered a good method for policyholders to hold a steady financial stream throughout their lives.

When universal life insurance policies were created in the 1970s, they quickly became popular because the policies allowed the policyholder to adjust the death benefit and premium costs. Several insurance companies are now facing legal action, in the form of life insurance overcharge class action lawsuits.

These claims allege the life insurance cost of insurance increases were done unfairly, and were conducted for the purpose of paying shareholders and for the insurance companies’ profit margins.

The life insurance cost of insurance increases have allegedly impacted policyholders by forcing them to choose between accepting higher premiums, reducing death benefits, and allowing policies to lapse.

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