Universal Life Insurance Premium Increases Burden Elderly Citizens

Universal life insurance premium increases are affecting thousands of retired citizens in the United States, placing many of them between a rock and a hard place.

Due to the significant universal life insurance premium increases announced in 2016, retired policyholders are finding they do not have the option of changing to an affordable plan due to their age.

These policyholders who purchased their universal life insurance policies decades prior are devastated to be in this position, as they cannot find affordable alternatives to their current policies.

Universal life insurance policies were very popular during the 1980s and 1990s when interest rates were high. They were considered a reliable way for retirees to earn extra income from their universal life insurance policies.

Universal life insurance polices work similarly to investments by increasing value for policyholders throughout the remainder of their lives.

Universal life insurance polices are sold with a guaranteed interest rate, with the cost of insurance only occasionally deducted and the remaining cash value going to the policyholder. This differs from term life insurance policies, in which the costs and benefits for the policyholders are set when signed.

Even though universal life insurance policies were supposed to give policyholders greater rewards, the increasing cost of insurance (COI) rates are leaving policyholders in a financially difficult position. Even if policyholders let their insurance policies lapse, the insurance companies will most likely benefit regardless.

The policyholders most affected are elderly, often 70 years old or over, making finding a new life insurance policy at an affordable cost almost impossible.

Overview of Universal Life Insurance Premium Increases

After insurance companies had their universal life insurance premium increases in 2016, the Consumer Federation of America (CFA) asked each respective state insurance commissioners to review these raised premiums to determine if they were fair.

The CFA stated they were concerned that insurance companies may have increased universal life insurance premiums to “protect their profitability.” It is important to note the universal life insurance premium increases were allegedly triggered by low interest rates plaguing the insurance companies for years.

Many of the insurance companies allegedly could not make the payout, which may have caused them to increase the premiums. One of the insurance companies that followed the trend of universal life insurance premium increases was Lincoln Financial.

In October 2016, the company was added to the list of insurance companies to do this. Reportedly, their COI went up by 100% and affected 25,000 policyholders. These insurance policies were issued by Jefferson Pilot Life from 1999 to 2007, primarily affecting elderly policyholders.

Several insurance companies are facing legal action from policyholders, alleging their COI increase rates were done to provide for shareholder dividends and were unfair to policyholders.

Potential claimants should contact a knowledgeable lawyer to determine eligibility for a universal life insurance premium increase lawsuit.

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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