Lincoln Financial Faces Criticism for Increased Life Insurance Premiums

Lincoln Financial is facing numerous complaints of increased premiums on universal life insurance policies, from elderly long term policyholders.

Lincoln Financial is one of several insurance companies that announced their premiums would increase in 2016, with some policy premiums rising by a concerning amount.

Long term policyholders that had obtained their life insurance policyholders have found it devastating as their old age makes it difficult to pursue more affordable options.

More specifically, Lincoln Financial universal insurance policy affected by this cost of insurance (COI) increase had risen 100% and had affected 25,000 policyholders.

Most insurance policies affected by the COI rate increased certain insurance policy premiums by 70% and over, with Lincoln Financial universal life policies at the epicenter of concern for customers.

The COI increase has been indicated to primarily individuals 70 years old and over, with most of them being unable to seek out new policies due to their age, medical conditions, and the costs of signing up for a new life insurance policy. According to Lincoln Financial, the reason for the COI increases was due to the large volume of lapsed policies.

Lincoln Financial policies purchased through Jefferson Pilot Life were most affected, consisting of the “Legend: Series policies: JP Legend 300, JP Legend 200, and JP Legend 100.

While policyholders whose premiums increased can opt for a different policy, their current life insurance police could lapse or reduce the amount after death. Should the insurance policy lapse, then the insurance company will most likely benefit from the outcome.

Overview of Universal Life Insurance Policy Premium Trends

It is important to note that universal life insurance polices are different from term life insurance policies, due to the latter having fixed costs and fixed benefits. Universal life insurance policies work more like investments, which can last throughout the policyholder’s lifetime.

While the cost of insurance is deducted on a periodic basis, the remaining monetary amount is supposed to go to the policyholder. Universal life insurance policies were considerably popular in the 1980s and 1990s when interests rate were higher, but long term policyholders complain they are now losing money on these policies due to decreased interest rates.

Insurance companies have previously stated that they have had difficult in paying out life insurance policies, since the benefits are generous in amount and were agreed to when interest rates were higher. According to the Baltimore Sun, the Consumer Federation of America had sent letters to state insurance commissioners in 2016.

These letters asked the insurance commissioners to review the COI increase to determine if the rise in premium was decided fairly. The concern advocacy group had reportedly requested this review, due to concerns of the insurance premiums rising to protect the insurance company’s profitability.

Lincoln Financial is the latest insurance company to announce a COI rate increase to its universal life insurance policies, which were purchased between 1999 to 2007. Affected policyholders may be eligible to file legal action against their insurance company, and should contact a specialized lawyer to determine eligibility.

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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