Universal Life Policy Increases Raise Questions Among Consumers

A number of companies have been accused of having improper price hikes for premiums of the universal life insurance policies that they sell.

Consumers say these significant price increases for holders of a universal life policy have forced some individuals to decrease the value of their policy or to allow their policy to lapse and receive no benefit.

What is a Universal Life Policy?

A universal life policy is a type of insurance that is considered a type of cash value life insurance. It is considered a flexible type of life insurance that also includes a savings component to it as well.

When a policyholder makes premium payments above the current cost of the insurance, the excess payment is credited toward the total cash value of the insurance policy, along with interest.

On a regular basis, the cost of insurance, also known as COI, is debited from the policy. Universal life policy products became popular in the 1980s and 1990s when federal insurance rates were higher.

Universal life policy products have accounted for up to 25% of all life insurance sales during certain years in which they were popular, and millions of Americans, particularly those over age 70, have a universal life policy.

Current Controversy Surrounding Universal Life Policy Practices

Because universal life policy products were purchased by policyholders during the times where high interest rates were common, insurance companies say that since insurance rates have been low for the last several years, they are losing money on these products.

In order to offset their losses, insurance companies say that they have had to increase the premiums of the universal life policy in order to be able to pay out these policies to eligible policyholders.

An article in the Wall Street Journal says that tens of thousands of holders of a universal life policy from various insurers have been notified that their cost of insurance will be increasing.

The amount of increase for some policyholders is modest, but for others it is quite substantial, with increases up to a whopping 200%. These increases can cost policyholders thousands of extra dollars per year.

In addition to the premium increases, policyholders have also noticed that the projected future values as well as the performance of their universal life policy has decreased from prior valuations.

Taking Legal Action over Improper Universal Life Policy Increases

Some lawsuits have already been filed against a number of insurance companies regarding these allegedly improper practices surrounding universal life policies.

These lawsuits argue that the companies are still continuing to profit and state that rising rates for a universal life policy may cause more consumers to cancel their policies, which will ultimately benefit the insurance companies by reducing their payouts associated with the universal life policy.

If you have a universal life policy and have recently experienced a significant increase on the premium of your policy, you may be eligible to participate in a free legal investigation. An attorney experienced with lawsuits regarding universal life policy increases can review your individual case at no charge, and can help determine if you qualify to take further legal action.

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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